Sean O'Grady: Even grim scenarios are optimistic

while not on the scale – yet – of the panic that gripped the financial world in the aftermath of the failure of Lehman Brothers in

2008, the gyrations in financial markets have something of the same feel, and much the same cause – the West's massive debts.

The news that growth and the real-estate market in the US have failed to show any sustained recovery after trillions of dollars worth of stimulus is dispiriting. The world is facing up to the reality, again, of protracted stagnation – if it is lucky. The worst-case scenarios are grimmer still; a second recession or even a full-blown slump.

While the problem three years ago was excessively indebted banks threatening the solvency of sovereign states, the threat now is precisely reversed – over-borrowed national treasuries being unable to sustain growth and rescue banks struggling to survive.

When the banks become too nervous to lend to each other – as happened in the 2007 credit crunch – then it is not long before they refuse to lend to the real economy. There are disturbing signs that those stresses are re-emerging, even if not on the scale of the original crunch. In 2008-09 confidence was restored by bold, coordinated action by governments. Even if the political will were present today the means – money – is in shorter supply.