When national banks start talking about lending money for absolutely ZERO interest, do you really need any other evidence that the market is not doing its job?

From Daily Mail:

Governor Mervyn King said he is ready to reduce rates to ‘whatever level is necessary’ to counter the economic storm.

He warned Britain’s economy could shrink by at least 2 per cent during 2009, pushing inflation into negative territory for the first time in almost half a century.

A worst-case scenario could see a slump of more than 3 per cent in gross domestic product, the biggest year-on-year fall since the beginning of 1981.

Former Tory Chancellor Ken Clarke, who led Britain’s recovery from Black Wednesday, warned the economy was heading for a ‘catastrophic crisis’ far worse than ‘anything that has occurred in my lifetime’.

‘There will be a very serious recession next year,’ he said. ‘I think the big problem in 2009 will be the catastrophic fall in consumer spending demand, spending in shops will get worse.’

The Bank confirmed the country has already entered its first recession since the early 1990s, blaming the slump in lending and chaos in the financial markets. It said national output will fall at an annual pace of around 2 per cent by the middle of 2009.

Listen, if you don’t believe that the market has failed us, then I’m not going to try and convince you otherwise. But I will tell you that none other than Warren Buffet favors government buying up shares in these key sectors that not only pay us interest but also give us equity at rock bottom prices. And do know that every single first world economic power on the face of this earth is set to take similar measures. Because when the market can’t spend, governments can. Why? Because they can print money. Yep, I know that doesn’t seem fair or right, but if you don’t understand that governments are simply the biggest businesses in world, well, reality check time.

But hey, go right ahead and keep believing that the market will just correct all of this and we can do nothing but just sit back and let company after company fail. No worries about any worldwide domino effect as consumer confidence completely evaporates and people only spend money on food, shelter and energy. Because, you know, that doesn’t effect anybody except all the industries that don’t sell food or shelter or energy. And really…how many of those are there out there?

Moving on…

Business Bank Of England To Slash Interest Rates To 0%?