More important, others now agree. The meetings of financial policymakers in Washington over the weekend bore fruit, first in a general communiqué and then in detailed programmes of action. The European agreement is particularly impressive. Mr Brown can rightly claim to have been the leader. The world has, as a result, stepped away from an abyss, though the road ahead remains strewn with obstacles.

Policymakers finally realised that a plan for dealing with such a severe financial crisis must contain those elements that are individually necessary and collectively sufficient. Two elements are necessary: massive provision of liquidity and recapitalisation of financially weak institutions. Two other elements will help, dependent on the circumstances: guarantees to lenders and purchases of defective assets. The US, with its complex financial system and bad mortgage assets, will find blanket guarantees hard to manage but may benefit from purchases. Europeans seem to be in the opposite situation.

The announced programmes are,
in scale and construction, what is needed. Difficulties will arise in containing the distorting effects of the guarantees and arranging an exit from a partially nationalised system into one better regulated than before. But the announcements made this week, not least in the US, epicentre
of the storm, should abate the panic.*