With no end in sight for the US banking crisis, uncertainty is corroding worldwide markets. That has changed the political debate: what was once unmentionable – even government ownership of banks – is now loudly discussed. This is a good sign: leaders must show they are prepared even for worst-case scenarios. The US bank rescue plan contains the tools to do this – but the government uses them too timidly.

The plan, fleshed out by Treasury secretary Tim Geithner this week, gives banks a “stress test” to see if they have enough capital. This can bring much-needed light to banks’ murky balance sheets and return some predictability to markets. Currently, however, that is where markets’ horizon ends. Mr Geithner has not said what he will do to banks deemed under water. This makes an enormous difference to investors: until they know what to expect, private finance will not thaw.