I was struck by King's assertion that banks should take a higher buffer of high-quality liquid assets: ie, it's time for RBS, HBOS etc to start to buy all that UK government IOU notes just in case the Chinese and Arabs lose their appetite for it. It is entirely possible that the nationalised banks are directed to fund Brown's misbehaviour - thus saving him from the IMF. The below graph, courtesy of Citi, shows just how UK banks appetite for UK debt has been increasing already:
The ludicrosity* of this approach boggles the mind: the government owns most of some banks, but not all of these banks. So they can direct the banks to buy up T-bills to fund their spending, and it doesn't damage their credit rating. So they can go more berserk and their tame banks will just buy it all up. At what point does the whole house of cards implode?
*Could be a made up word.