Whenever the equity market takes a serious downturn, conspiracy theorists speculate that the US president’s Working Group on Financial Markets, popularly known as the plunge protection team, is secretly acting to stabilise the market. Usually the case for such intervention is thin. Yet today there is room for a genuine policy debate on this score.

The funding position of industry and commerce in the credit squeeze is weak, so maintaining companies’ access to sensibly priced equity is important. Pension funds are a potential Achilles heel for the corporate sector because many confront a double hit. As the value of their equity assets declines, lower interest rates may increase the value of their liabilities. And in countries where banks still have large equity holdings, declining prices shrink bank capital.