Oh no, the Government is being asked to buy the banks’ bad loans. Banks that no longer trust each other enough to lend among themselves are hoping the UK government will use the Bank of England to buy the mortgage-backed securities that they cannot sell in the open market.

The theory is that they will re-lend the cash to businesses or homebuyers and get the economy going: our fear should be that they will use it to pay the higher dividends they have promised their shareholders, finance the bonuses of the staff who got them into this mess or, worse still, make more bad loans.

Or if the Bank ends up buying duff debt from foreign banks then its money will be transferred abroad to revive other countries’ economies.

The Government and Bank have already bailed out Northern Rock: that should be a lesson on why not to do it again.

But if the state is to take the risk off the balance sheets of commercial banks – and it shouldn’t – then it should be for a price. As the securities have proved unsaleable, that price should be heavily discounted from par value - but the lower the price, the more the point of the exercise is defeated because it provides less cash for re-investing.

There would have to be considerable upside for the state in helping the City’s banks present healthier-looking accounts. A guarantee against losses would be only a start – but what value that if the parent company is unable to repay, like Bear Stearns.

Government’s job is to bash banks’ heads together – not to give them hand-outs. If that means the crunch squeezes tighter, so be it. There is nothing to gain from transferring the private-sector banks’ problems to the state.

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