The UK's policy will make historians wince. But being seen to be "doing something" is easier than doing what really needs to be done. For that would involve politicians tackling powerful vested interests and admitting to previous regulatory mistakes. Ministers, first and foremost, need to hose down a banking sector that's holding the country to ransom. Our most senior bankers should be gathered in a locked room and – under threat of custodial sentence – be forced to disclose the full extent of their potential sub-prime losses. At the moment, banks are lying about the liabilities they face. That's why they won't lend to each other – which has gridlocked the inter-bank market, blocking crucial credit lines to firms and households.