Plans by Treasury secretary Tim Geithner to fund a carry trade for investors to purchase toxic assets from the banks was bang in line with the grand US tradition of using state finance to bolster capitalism.

In years gone by, a similar ruse was used by the state-sponsored Resolution Trust Corporation to resolve the US savings and loans crisis. Fannie Mae and Freddie Mac supplied support to mortgage lenders for years prior to the financial brick wall they ran into last year.