Japan’s 1990s banking crisis offers the solution to our woes, says Bill Emmott

We are in an era of globalisation, we are told, of flat, inter-connected worlds. Yet the response in the US Congress to the Treasury’s proposed $700 billion remedy for this very international financial crisis has been strikingly parochial.

Not just that: it has been delusional. How else to describe those Congressmen who opposed the first vote, accusing Treasury Secretary Hank Paulson of practising “financial socialism”, which was somehow “un-American”?

This episode bodes ill for the world economy’s stability. For, huge as it is, this $700 billion package is unlikely to be the end of the story. At some stage next year, the new administration, whether led by Barack Obama or John McCain, will most …