The government announced last week its loan guarantee scheme to encourage fresh lending to small and medium-sized businesses. The scheme is a little complex and will take time to be much used. Will it be enough? Or will it have the impact of an air rifle pellet, rather than the artillery barrage we now need? The credit crunch is causing severe pain and is generating un-employment and impoverishment at an alarming pace. This first step may be too small to achieve the government's ambitious aims.
Things are bad - unprecedentedly bad - so we need to consider radical actions and actions that would have been thought lunatic a year or so ago.
Royal Bank of Scotland and Lloyds Banking Group are now in an un-comfortable position. The government is their dominant shareholder, with the taxpayer having 100 per cent of the downside in these banks - even guaranteeing the pensions - but less of the upside. The markets are nervous of their shares. The markets clearly believe that there is a high chance more capital will need to be injected into these banks and this will almost certainly have to come from the taxpayer.
These banks have split and incompatible objectives - maximising profits (there was a time when they used to make them) for their shareholders on the one hand, and obliging the latest political desires on the other. Should they husband capital or should they try to solve the credit crunch for the nation with the lavish levels of lending that caused the crisis in the first place?
The likelihood of success for this "nearly nationalised" model is low, as the conflict of aims is irresolvable. As long as they remain nearly nationalised they will remain subject to difficult questions of capital adequacy and governance, and uncertainty as to their future.
These banks also need to cleanse their balance sheets of toxic assets and bad loans. The new insurance scheme will help but until this happens no one will trust them enough to lend freely to them or place deposits with them without a comprehensive government guarantee.
There is much talk of the heavily lossmaking Citigroup ending up nationalised in pieces in the US, Anglo Irish Bank has just been nationalised and there seems to be considerable expectation that the UK will follow by nationalising at least RBS and Lloyds Banking Group.
If it is to happen, the sooner the better. Let us get it over with - nationalise the pair of them. With public sector backing, we can use these banks to restart the flow of credit. And they could lend a lot, since the government can provide a better assurance of adequate capital than anyone else. This would temper the recession in the short term.
The banks could also sort out their toxic stuff in an unrushed and orderly process that would minimise both losses and market dislocation.
Over a few years, it would be possible to clean up and simplify these banks and return them to private ownership in a good state.
In some ways, it would be similar to a private equity investment. It would allow for more decisive management, doing away with the short-term targets and reporting of PLCs. But unlike a private equity deal, the banks would go from being publicly listed to being publicly owned - so public accountability and transparency would be maintained.
There are obvious areas of uncertainty. Could a publicly owned bank lend prudently - that is, could it say "No" to hopeless but politically desirable cases? Will the government print even more money to capitalise the banks, with the future inflationary risks that generates? Will these banks spoil the market for real private sector banks by lending too much and too cheaply? Will the banks get the wrong management? Will it hurt the UK's own credit rating to own such large balance sheets?
These are serious risks and, to some extent, they will probably all happen.
But things are so bad that the least worst course is to accept nationalisation of these banks. And then to do everything possible to restore both the nationalised banks, and the in effect government guaranteed banks not nationalised, to the private sector as soon as possible.
For the sake of financial stability, it could simply be Hobson's choice for the government.
John McFall is chairman of the Commons Treasury committee. Jon Moulton is founder of Alchemy Partners