The angry men made no effort to conceal their rage.

“It’s unacceptable,” said his Lordship. The Dr, his eyes cold as steel, in the electric atmosphere of Westminster warned: “it would be an extremely brave person” that could rule out the full force of retribution. As for the politician, well, his usual passive countenance took on the hint of a grimace.

Mr Darling is not one for losing his rag. Yesterday, on the Today programme, when John Humphrys asked him to give an example of Gordon Brown warning of the dangers of building debt, he replied: “I am sorry, but I don’t have my book of quotations with me.” But that is about as sarcastic as he gets.

But yesterday, the triumvirate of Alistair Darling, Dr Mervyn King and Lord Mandelson of Foy and Hartlepool, finally lost patience with the banks.

“It’s completely unacceptable to the government and business in this country,“  said Lord Mandy “for banks indefinitely to stop functioning as banks. We are in very intensive discussions with the banks, believe me.”

Mr Darling himself is not impressed. He reckons banks have missed the point. He does not want them to use all that government money he so kindly provided as a kind of comfortable cushion, upon which to rest their fat exteriors, and safely watch the recession pass them by, like neutral spectators as the gladiators that are businesses and home-owners battle the lion that is the economic crisis.

The snag, though, is that it all rather misses the point.

Fourteen months or so ago, just before Northern Rock crashed into oblivion, the chancellor said he wanted to see a return to “traditional banking”.

At the time, it was stated here that this was the last thing we needed.

But, in traditional banking, lending is a function of how much money the banks have available to lend.

Interbank lending, wholesale money markets, and money flowing in from China, Japan and the Middle East created the liquidity seen before the crash. None of this was the stuff that traditional banking is made of.

The good news is that all that funding made available to the banks means they probably won’t go bust – probably not.

But, if they are going to start lending again, lending, that is, in anything like the volumes seen before the words ‘credit crunch’ fell into the popular lexicon, the banks need more money from depositors, a lot more.

Keynes said that in times of a recession the last thing you needed was for people to save more, but if people don’t save, where’s the banks’ money to come from? Banking in Keynes’s time was different. It was…, how can we put it, more traditional. His writing took no account of the possibility of the emergence of modern banking techniques.

Some businesses have an overdraft, others are in credit. The credit customers effectively fund the debtor customers at a bank.

But in a downturn like this one, many businesses may find they have less spondulicks, and  may go overdrawn, when normally they are good credit customers of the banks. All of a sudden, the companies the banks banked on for being in credit, go overdrawn, meaning there is less credit available for companies that are usually overdrawn anyway, and they in turn may find a continuing lack of access to funds causes them to go bankrupt.

The UK’s personal debt mountain is so vast, that even £37 billion of taxpayers’ money may not be enough to cover all bank losses, not by a long way. After all, Citibank, which not so long ago was the world’s largest bank, is tottering, for goodness sake. It is no wonder that the banks are now more cautious.

It is simply not realistic to allow consumer debt to carry on growing,.

But if you are Mr D, Lord M or even GB, then, of course, there never was a debt bubble. The housing boom was a good thing and banks have no excuse for not returning to the good practice they exercised earlier this decade.

The truth is, however, the sooner the authorities here face up to reality, rather than mirror the authorities in Japan 18 years or so ago, and bury their heads so deep in the sand it is a wonder they don’t find they have come out the other end and are staring into the South Pacific, then the sooner we can commence the proper recovery.

© Investment & Business News 2013