Robert Peston writes on his blog today that, according ot his sources (HM Treasury) the government is very panicked by the less than stunning impact of Jonah Brown's plan to save the world.
Some people may have said as much. However, the global situation has many problems that are going to take years to sort out and a heavy recession is inevitable. The success of the banking bailout is that we will NOT have a DEPRESSION. Sometimes success is the lesser of two evils.
One way to burden us through recession is through excessive Government spending. This is Keynes worst advice. It never worked in the US in the 1930's - GDP falls, Share prices and unemployment all stayed at around the same levels until the early 1940's. FDR's great Keynesian experiment was a failure. Why?
Because government's do not spend the money wisely. They buy helicopters that cannot fly and bridges to nowhere. Yet to do this they borrow from the future and maintain high taxes that increase the mis-allocation of scarce capital. I don't advocate huge spending cuts which traumatises the situation, but a big planfor public programmes is not the answer.
If Labour do this, they will undo the relative success they have had in re-capitalising the banks.