Editor's letter

As Credit went to press, the US House of Representatives was due to vote a second time on the proposed bail-out for banks holding assets they are unable to value or sell. While it is easy to sympathise with the view that this kind of intervention is socialism for banks or Main St rescuing Wall St, politicians - and voters - must remember that much more is at stake than the fortunes of the banks. Businesses rely on credit facilities obtained from financial institutions to pay their liabilities, the most costly of which tends to be payroll.

There's been speculation about when the financial system's woes will feed through into the 'real economy'. If the bail-out or a swiftly executed successor plan doesn't succeed, the answer to that question will be 'very soon' and redundancies will result.

We should also emphasise that the plan before Congress doesn't amount to a 'get out of jail free' card. We don't know what level will be set for the assets concerned, but it's likely that some banks will be forced to make further writedowns. Some will fail.

What's clear is that the market alone has failed to agree on a bottoming out and without that the system - and soon enough economies throughout the world - will remain paralysed. It's useless to speculate about the US government's chances of making money by holding currently distressed assets to maturity - there are no winners among the parties trying to make this deal work. But if it isn't allowed to go through, we'll all be losers.

Matthew Attwood.