The subprime crisis is a massive macroeconomic shock in need of a determined policy response. But what kind? It will probably not require a symmetrical response across countries and policy instruments but a more targeted strategy.

The US and the UK, for example, should respond harder than the eurozone and Asia, where the recession probability is much lower. While I never believed in decoupling – the theory spun by exuberant investment bankers that the rest of the world could happily grow when the US was in recession – this is an asymmetric crisis nevertheless.