The entire Eurozone seems to be following Gordon Brown’s lead and working to recapitalize the banks by having the government take an equity stake in firms that need assistance. This is how Sweden successfully resolved its banking crisis in the 1990s and it appears to be the right thing to do. Here in the US, Hank Paulson seems to be edging in that direction, but he’s already wasted weeks trying desperately to find another solution and even now sort of seems to be dragging his feet — playing a very dangerous game on behalf of fealty to conservative ideology.
Meanwhile, there’s more than a little irony in the fact that Brown and his cabinet, who’ll be the heroes of this story if it turns out to have a decent ending, still look fairly likely to be thrown out of power as the Tories are boosted by the generally adverse economic trends. Maybe a thoroughgoing endorsement of Brown’s leadership from a Nobel Prize winning economist will help Labour in the polls.