The point at which a Minsky moment becomes a Minsky meltdown has arrived. Named after the economist, Hyman Minsky, this is the point where financial instability has become so acute that only an exceptional, immediate and global government attack on the causes of instability is likely to avert a systemic banking failure, in which non-financial companies could rapidly fail too. The Group of Seven leading industrialised nations and the European Union now look like they “get it”, but with several hundred billion dollars of debt to be rolled over in the coming weeks, the question is whether they have the time to “do it” too.

The omens are a bit more encouraging, not least because of the momentum for action following the comprehensive proposals, announced by the UK government last week, emphasising significant state-sponsored recapitalisation of banks, large-scale intervention in the money markets in the form of lending guarantees (a type of disintermediation of the banking system) and as much liquidity as is necessary to help contain forced asset sales. Following the G7 statement of principles, the US and Europe are now pursuing similar proposals. However, implementation must now occur quickly and decisively if the meltdown is to be averted once and for all.