So what the hell do we do now.

So, what the hell do we do now? The G7 meeting delivered nothing specific and merely restated what we already know about the crisis. It’s bad. Political leaders promised “decisive action using all available tools” but didn’t say what those actually were. The idea of central bankers wielding their spanners on the broken down world financial system - like AA men on your car - is a comforting one, but it isn’t actually happening. Here are ten things that could.

1) Further co-ordinated cuts in interest rates, like last week’s .5% reduction by central banks. This is more as a psychological boost since the financial crisis has gone beyond anything that can be resolved by cheap money. But it would provide confidence that the world can work together, and we need that.

2) A co-ordinated guarantee of banking deposits across the G7 to halt the current systemic run on the banks, and to restore confidence in bank lending. This will require the creation of an international liquidity and debt guarantee fund of several trillion dollars. The UK model shows it can be done.

3) Nationalisation of leading banks in the G7 economies removing their chief executives, closing down insolvent banks and recapitalising the rest. The establishment of a genuine international bank, based on the existing Bank of International Settlement in Basel, with powers to enforce responsible banking practice.

4)Co-ordinated tax cuts on middle and lower income earners throughout the mature economies paid for by increased taxes on the wealthy. Ordinary people have lost fortunes in their pensions and their houses. If they stop spending altogether, as is now likely, a depression will ensue - that’s what happened in the 1930s. Society needs to be rebalanced after the Age of Irresponsibility. Gross inequalities of wealth were a large part of the problem as bonus-driven executives took ever greater risks in pursuit of huge and largely untaxed earnings.

5) The managed collapse of what has been called the shadow banking system of highly leveraged hedge funds, private equity groups and off balance sheet vehicles created by the big banks. They’re going bust anyway, but this needs to be orderly so that fire sales of assets are avoided where possible. It's called "triage".

6) Similarly, there must be regulation of the £500trillion global derivatives market so that markets in instruments like credit derivatives are managed openly and transparently through a proper exchange - like the stock exchange, and futures exchanges. These require evidence that traders have financial reserves to meet losses. The collapse of Lehman Brothers led to a £400bn hole in CDS contracts and more will follow as defaults continue.

7)Public investment. Government spending will be seriously constrained in the medium term in all industrialised countries, but they must find a way of collectively laying the groundwork for economic recovery by mobilising investment - just as Roosevelt did in America in the 1930s - through public works and infrastructure projects. As it happens, climate change could provide the basis for this. It is a global problem that requires global solutions and will create a new era of ‘green industries’.

8)All this will have to go along with a commitment in future that central banks will INCREASE interest rates to encourage saving, discourage personal debt and prevent asset bubbles like the British property boom ever happening again. Tax incentives which encourage property speculation must be stamped out forever. Houses are for living in, not investing.

9) Reform of the international financial institutions like the IMF and the World Bank, which have acted as cheerleaders for US “risk” capitalism and now have lost the confidence of the developing world. The recovery of the developed world now depends on the goodwill of the developing countries like China, India, the Middle East. We needs their cash reserves, to be invested, not in property speculation, but in national recovery projects financed by bond issues.

10) Cross fingers, touch wood, pray. Go for long walks. Think pleasant thoughts. This will all end.