Alan Greenspans comments that interest rates in the UK may need to go up to 10% were not helpful. If this happened there would be chaos and much more panicking. These comments from the ex master of smoke-and-mirror central banking from the worlds top-dog credit line institution, which we all know will one day be chalenged as the USA declines relative to China and other poulous and industrious nations. Perhaps he knows the dangers so well of the empty promises of banks who lend out 90% more than they have in deposits which they are allowed to do. The saving grace is that cash is only a tiny percentage of all circulating money and the fact that most transactions are electronic means that providing our plastic works we will have to keep our money as digits on the hard drives of the banks databases. There is nowhere else for it to go. Money is basically a mutual agreement between people on the storage of value and as such just depends on people collectively agreeing, not paper money.

dengreenhow, Inverness, UK

"all the security that any depositor in a British bank could possibly ask for" This is true, but still they queue (as of mid-Tuesday morning).

Some are surely queuing just for the opportunity to tell a TV crew they don't trust politicians. Others seem to be in a very strange place where they openly admit their deposit is safe but still want to move to another, unresearched, bank account.

Last year a study found that a significant number of people who filled out a fake "phishing" form on the web knew about phishing, and thought this was likely to be a phishing attempt, but they went ahead and filled out the form anyway. This seems to be a mental state similar that of those in the queues. Numbers of these people are not just acting irrationally, but incomprehensibly.

1) With people acting like this, can we be sure the panic won't infect depositors at other banks?

2) Any strategy for avoiding future panics based on a model of rational behaviour is likely to fail at some point.

Ian Kemmish, Biggleswade, UK

Another example of the failure of the FSA to regulate properly following on from precipice bonds, split caps, endowments, Equitable and pensions. Of course the FSA will blame unusual conditions, but with their ARROW risk assessments, enormous budget, and 'supposedly' high quality management, I'm not sure I'll believe them.

Simon Harbord, Newcastle,

God save the King! We believe again! Is it really that simple? Faith is not exhausted overnight and nor can it be restored overnight. The end is not nigh. It is here.

ludwig, austria,

Very sensible commentary from Mr Kaletsky.

But the government and the Bank of England have indeed had their heads in the sand. They should have provided a firm commitment to protecting depositors a week earlier, after Northern Rock approached the BoE. Instead they were making speeches about moral hazard and 'good old fashioned' banking. King and Darling have been forced to eat their words and this should be as embarrassing for the government as Black Wednesday.

A Clarke, London,

Though I take the point on how the Rock obtained its finance short and then loaned it long, it seems that much can be drawn from the conversion of building societies into banks.

Though they may be banks in name, they hardly have the spread of business nor the experience of a true banking house.

Chris Kenney, High Wycombe, Bucks

Thank goodness for Anatole Kaletsky, his incisive understanding, pragmatic common sense and clear communication skills.

I only hope the government and the Bank of England take note.

Alistair Nicholls, Northwich, Cheshire

I don't see the same distinction Mr Kaletsky seems to see between depositors and shareholders, and the banking industry and any other.

Depositors in Northern Rock were earning 6% plus. That is a very high return. I don't think that Northern Rock depositors were behaving all that differently to people who speculate.

And certainly, rewarding such return-chasing with an unconditional guarantee teaches exactly the wrong lesson about chasing high returns.

I wonder how many shady characters are now rubbing their hands in the knowledge that the prospect of a bail-out is one more argument they can use to tempt people into high-risk schemes.

The guarantee doesn't even have to be effective. It just has to be "out there" to tempt depositors to make more and more unwise bets.

jon livesey, Sunnyvale, CA/US

I have no issue with any of Anatole's comments nor savers being protected. I do though have issue with the taxpayer providing a guarantee and, regardless whether the guarantee is used or not, seemingly receiving nothing for it. Banks would not provide anything like such a guarantees without a huge fee, regardless the risks, so why is the taxpayer? In the same vein, Northern Rock shareholders invested for potential reward and with that came risk. That risk has now materialised through the pursuit of an overtly aggressive strategy that ostensibly lacked any form of fallback should the sky fall in. Were the situation not politically sensitive those shareholders would have been left high and dry yet here they have not. I would have more confidence in the financial policies of this government if, for once, they realised the taxpayers would like to see value for money as much as any private institution and acted accordingly.

James D, Ipswich, UK

I can insure your house against nuclear attack. However in the chaotic conditions of a nuclear war, what would a piece of paper saying that you hold an insurance policy with me be worth? Similarly, governments can run out of money, and in the chaotic condtions of a banking crisis they are likely to. Insuring large deposits is making a similar mistake to taking out an inusrance policy agaisnt nuclear attack.

Malcolm McLean, Bradford, UK

"Having failed to reassure savers on Friday morning with the announcement of a credit line from the Bank of England, the Chancellor has bitten the bullet..."
It seems there is no risk to their savings, but if they keep whining the Governor will keep offering more to appease them. Depositors now are assured they cannot lose, so they should bargain for more. Say B of E must double Northern Rock savings interest rates or the bank run continues. It's either a one-way bet or blackmail, depending on how you view things.

Gordon Murray, Edinburgh,

Well, I have learnt one valuable lesson, 24 hours is a long time in the life of a leading commentator on economics and I used to be a big fan of Anatole Kaletsky.

Running on Empty, Gerrards Cross, Leafy Bucks

The Government wants us to save for our old age. Let's say that by the time we retire we've managed to save £200,000. Are we really expected to open 100 separate savings accounts to keep ourselves safe?

You can say what you like about mattresses but at least you can get your money out of them.

Joseph Bruno, London,

I would say that this article by Mr Kaletsky is well researched and well written, and highlights some of the weaknesses in the current regulatory systems.

Dave Humphrey, Gloucester,

I fully concur with a sensible deposit insurance scheme for authorised banks funded by the institutions themselves. The FDIC system in the US is not perfect but allows small depositors to sleep at night. The big depositors and shareholders can look after themselves.

The reality is in this day and age no government can afford to let small depositors down if confidence in the system is to be maintained.

The real fault here lies with the regulators, esecially the FSA who should have questioned Northern Rock's business model. More generally, it is the fault of the international regualtory system that has allowed off balance sheet derivatives to swell to $600 billion - more than 10 times world GDP.

William Thomson, Manila, Philippines

Actually, while not necessarily considered a major world economy, New Zealand has no deposit insurance at all, and the banks offer no guarantees.

Amanda Pearson, Auckland, New Zealand

Another pice of well argued but flawed rubbish from Mr Kaletsky. He states that the Major Government was frozen when the markets tried to throw it out of the ERM. Not true. Nigel Lawson raised interest rates to 15% and bought pounds back like there was no tomorrow in a gesture tantamount to King Kanute attempting to hold back the tide. As we know today this was pointless and merely a waste of tax payers money. The lesson here is that in the modern global market governments cannot control market forces and to try to do so is ultimately a waste of money and bound to end in humiliation.
Government guarantees over Northern Rock are clearly proving groundless as evidenced by the queues on the high street. Once again the markets are doing their own thing. As the poison CDO contagion spreads does Mr Koletsky think the taxpayer is going to bail ever affected bank out and even if he tried would he succeed? Pure folly.

Jonathan Bwater, Huntsville, USA