Call us naïve if you like, but there is one voice in modern politics that seems consistently to talk solid sense, and that voice belongs to the Grand Old Man of the Lib-Dems - no, not Menzies Campbell, the other Grand Old Man, Vince Cable.
Here he is on the global financial crisis ...
When my job was attempting to predict future economic developments for the Shell oil company, I was frequently reminded of an Arabic saying: 'Those who claim to foresee the future are lying, even if by chance they are later proved right.'
The extraordinary speed with which the current financial and economic crisis has unfolded should underline the need for caution in anticipating the next few months, let alone years.
It is perhaps more helpful to think of plausible scenarios than likely developments, and to frame any policy proposals in a spirit of humility, recognising that no one fully understands how the current drama will play out.
What we do have is historical experience. There is much wisdom in the adage that 'history is an imperfect guide to the future, but it is the only one we have'.
Economic history provides a long record of cycles - in goods and raw material prices, house prices and construction, manufacturing production, employment - and financial market manias leading to banking crises.
It is only extraordinary conceit and complacency that have shielded those who should have known better from recognising the danger signs - most notoriously in Gordon Brown's claim to have abolished 'boom and bust'.
It is now broadly recognised that the current upheaval is much more serious than those experienced, at least in the developed world, since the Second World War.
Parallels are now being drawn with the Great Crash and then the Depression of the Thirties. In America, by no means the biggest casualty of that period, Gross Domestic Product (GDP) fell by 30 per cent from peak to trough and took a decade to recover to 1929 levels.
But, in fact, the 1929 share price crash and what followed were different from, and worse than, anything that seems likely today.
This crisis has occurred after decades of rising prosperity and technological innovation, which provide a platform for recovery, unlike the inter-war world that was weakened by war, hyperinflation in some countries and political instability.
The world today also has a dense network of international cooperative agreements covering trade, standard-setting, banking regulation and overseas investment. These may be flawed, but they are far ahead of the pre-war world.
Another new development is the major impact on global demand of China, India and other emerging economies. It is possible that some of these countries will be dragged under by the financial crisis, but China and India, at least, have strong domestic demand and well diversified economies.
There has also been a rapid policy response to prevent a wholesale collapse of the banking system around the world. A vast amount of economic firepower is now being deployed to counter the global recession.
These are the optimistic factors that lead many commentators to believe the crisis will lead to recovery in a couple of years at most. Even if the analysis is wrong, optimism is valuable as a source of consumer and business confidence, and should not be blithely dismissed.
It is worth recalling Dr Samuel Johnson's advice about overreacting to economic crisis, as in the 'general distrust and timidity' that followed in the wake of the bursting of the South Sea Bubble in 1720: 'Little more than a panick terrour from which when they recover many will wonder why they were frightened'.
But the modern financial system is more complex and more interconnected than in previous crises. The extraordinary scale of the derivatives markets, many times bigger than the world economy, points to the risk of even greater financial shocks.
The degree of leverage now being reversed is staggering, and the underlying global imbalances - notably between the savers and the spenders - will require long and painful adjustment.
The pain to be faced - in unemployment, home repossessions and loss of savings - will produce a political reaction that could put at risk many of the post-war gains, such as international consensus over the merits of trade, which we take for granted.
So it is possible to envisage two broad scenarios. One is that the rapid policy response will work, but after a nastier recession than the governments of the leading economies now expect. Another possibility is the policy response will not work because the problems, especially in the banking system, are too deep-rooted.
The problems faced by some countries, especially Britain and America, are not just technical and economic, but represent a blow to the underlying value system, the social contract. Most people's sense of fairness had already been assaulted by widening extremes of wealth and income.
By 2007 the value attributed in assets to 'high net-worth' individuals (dollar millionaires) was, on paper, three times greater than America's Gross National Product (GNP), and higher than the combined GNP of the G7 countries. At that point, the income of the world's richest 500 billionaires exceeded that of the world's poorest 420million people.
However, widening inequality of wealth and income has been politically endorsed because it appeared to be a consequence of economic progress. Even the less obviously useful people in the City of London or the New York markets, or Russian and Arab billionaires, were part of a success story that provided full employment and rising living standards.
That has now changed. Hardworking, thrifty, law-abiding people are getting hurt. Yet they can see that some of those who made a fortune in bonuses brought their banks to their knees, and that those banks are now being rescued by the taxpayer.
The reckless and incompetent are being rewarded, the prudent and socially responsible punished. Therein lies a great sense of unfairness. We do not know how this sense of grievance will manifest itself politically, but there is unlikely to be a return to the freewheeling ways of before the crisis.
What should be done? Some argue that nothing much should be done, that the crisis will, like a forest fire, burn itself out, and that to intervene would prevent a necessary purge of past excesses.
But US President Barack Obama has used the image that when a house is on fire and the fire is in danger of spreading, the fire brigade should not watch in the hope of encouraging greater awareness of fire risk and discouraging habits such as smoking in bed. Firemen fighting a big blaze need to pour on lots of water.
Monetary expansion through deep cuts in interest rates to kickstart spending is the first line of defence. Monetary expansion is now being pursued in the US, the UK, the eurozone, Japan, Sweden and elsewhere. The aim is to spur spending by reducing the cost of borrowing for firms and households.
Active monetary policy through interest-rate cuts is necessary rather than sufficient, however. It cannot work once rates have fallen to zero, or if the public is so frightened that households and businesses hoard cash in spite of low interest rates.
There are other ways of stimulating the economy using monetary policy. The central bank can pump more money into the economy to encourage spending. It can do this by expanding the reserves of the banks, for the purpose of lending.
Governments can lend to firms (by buying their short-term debt, as is happening in America), though this raises problems of the Government acting as a lending agency and can work only for large firms.
Alternatively, money can simply be printed and handed out to people to spend. But, again, the problem is people may hoard rather than spend.
Where monetary policy does not work, governments have to use fiscal policy: government deficit financing, putting money into peoples' pockets via tax cuts or public spending, or both.
In a modern economy, there is broad acceptance that deficits should be allowed to widen in a period of slowdown (because tax receipts fall and welfare costs rise), offset by surpluses in a cyclical upswing.
But in a slump, Keynesian remedies - those based on the ideas of British economist John Maynard Keynes - go further than that and involve a calculated additional injection of purchasing power through deficit-financed tax cuts or Government spending or both in an attempt to kick-start the economy.
The fiscal stimulus should do either or both of two things: put money into the hands of consumers or into a programme of public infrastructure investment that can be mobilised quickly. This includes social housebuilding or rail and road projects for which preparations have already been completed - what Americans call 'shovel-ready' projects.
The Obama package passed by Congress in January meets these requirements to the tune of about four per cent of GDP.
The Gordon Brown stimulus package announced last November is more modest (just under one per cent of GDP) and the temporary cut in VAT is unlikely to do much for private consumption because it is a drop in an ocean of retailer discounting.
I take the view that, on balance, it is right to attempt a fiscal stimulus. The alternative is a prolonged and deepening slump.
What else can be done? Is the only solution to wait until confidence gradually returns? The problem with waiting is that good companies will be dragged down because they can't renew their lines of credit.
One possibility is further bank recapitalisation, but this would involve yet more taxpayers' money.
Instead of, or alongside, further recapitalisation, I believe governments will have to treat the banks as if they were nationalised and require them to keep lending to solvent customers, recognising that there may be some bad debts as a result.
In Britain, majority State ownership of RBS-NatWest and Lloyds TSB-HBOS has meant there is a narrowing debate between 'nearly nationalisation' and outright nationalisation.
The latter takes the Government further, and reluctantly, into the direction of lending but it provides the means to bring hidden bad debt into the light and an opportunity to ensure new flows of credit - as is now, belatedly, occurring through Northern Rock.
In any event, a government has no alternative but to keep banks performing their role of transforming short-term assets into long-term loans until a more fundamental reform of the banking system can be introduced. At the very least, government nominees to the boards of rescued banks should be directing strategy.
Other steps have to be taken to remove bad and 'toxic' debts from the banking system. The most successful programme for managing a bank crisis came from the Swedish Bank Support Authority in the early Nineties. It involved bank recapitalisation, but also the separation of 'good' and 'bad' assets into 'good' and 'bad' banks. The latter were actively managed in order to reduce losses, and the former prepared for (profitable) privatisation.
The Swedish model is not entirely applicable today, but the key elements - recapitalisation, the creation of a 'bad bank', active state management pending reprivatisation of a reformed, restructured system - provide the best template available.
There is one other element that may have to be adopted: additional measures to encourage new lending, either direct lending that bypasses the banks or, alternatively, State guarantees for new lending.
Different countries will require a different combination of these measures to escape from this crises. But in each case, the price for restoring financial stability will be a greatly increased role for the State in the banking sector.
That is, however, merely a short-term fix. After the crisis there will have to be a new regulatory regime providing better protection against systemic risk.
Nothing has caused more damage here and in America than the involvement of what were localised and specialised retail banks in global investment banking.
Investment banking has, in recent years, resembled a casino, and the massive scale of gambling losses has dragged down traditional business and retail lending activities as banks try to rebuild their balance sheets. This was one aspect of modern financial liberalisation that had dire consequences.
This liberalisation now has to be reversed. The sheer scale of the balance sheets of 'British' banks such as Royal Bank of Scotland/NatWest and Barclays - both of which have assets and liabilities bigger than the whole of the British GDP - is a reminder of how their business decisions impact so powerfully on the UK economy, and how their errors have inflicted widespread damage.
There are several kinds of banking structure that could emerge from this crisis. One is that banks could resemble utilities, like water companies. They would become national, not international, institutions, servicing business and individual borrowers in return for 'lender of last resort' protection.
They would be closely regulated and subject to statutory codes of conduct, allowed to earn a utility rate of return and discouraged or forbidden) from venturing into high-risk activities. Bank managers would be incentivised to be reliable, predictable, boring - and accessible.
Financial wizards and thrill-seeking risk-takers would be free to participate in non-retail institutions such as hedge funds which, quite explicitly, enjoy no Government protection.
An alternative model is that there could be open competition, with bank licences available to a wider range of institutions - retailers, mutuals, established banks - which would be free to attract deposits, provided they satisfied a regulatory test of fitness. There would be protection for depositors, but none for the institutions and their shareholders.
But there is one set of issues that could derail any co-operative response and to generate serious conflict. It concerns the shift in the centre of gravity of the world economy to the East, particularly to China, and the imbalances that have grown up, with China (and other surplus-savings economies) providing large flows of capital to America (and the UK).
By agreeing to participate in a common approach to fiscal stimulus, the Chinese are signalling a recognition that they can continue to coexist peacefully (in economic and, perhaps, military terms) only if their model of economic growth shifts towards domestic demand rather than export.
Ominously, however, China has responded to a slowdown in growth and exports by pushing its undervalued exchange rate lower. And China's official reading of the crisis has been in terms of Western economic weakness and lack of financial discipline, rather than a recognition of shared responsibility and mutual weaknesses.
As the crisis deepens, there are American and European politicians aplenty spoiling for an economic war with China. That would be a disaster. There is an alternative: a new multilateralism that recognises the changing balance in the world economy and has Asia at the heart, not at the edge of it.
A New Bretton Woods Agreement - a system promoting monetary co-operation between nations - if it were to happen, would be better hosted in Singapore than America. The key participants would be America, China, Japan, the eurozone and India.
There are four issues it would have to resolve. First, leftover business from the Bretton Woods of 1944 - exchange rates, economic imbalances, and macroeconomic stability - which has a new dimension in the surpluses of China (and other Asian and oil-exporting countries) vis-a-vis the deficits of the United States (and others).
The second and third issues are man-made climate change and revival of the stalled talks on world trade. Last but not least, the development agenda - to eliminate hunger, poverty and disease - has to remain central, for both economic and moral reasons.
What is striking about recent events is the alacrity with which America and the European Union mobilised $3trillion in capital and guarantees for failed banks, having failed to mobilise $300million to help fight hunger in the midst of a food-supply crisis earlier in 2008.
Such twisted priorities do not bode well; but a structure of global governance in which the main emerging economies have parity would do something to redress the balance.
How nice: an authoritative, informed, un-hysterical account that you can actually understand!
This was an extract published in the newspapers, taken from Vince Cable's new book "The Storm: the world economic crisis and what it means"
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