In its latest MPC minutes, the Bank of England revealed it was a unanimous decision to cut interest rates by 1.5 per cent this month. It considered a cut of over 2 per cent, but rejected it saying it would have been too much of a shock for the economy.

One of the Bank's biggest concerns is Libor rates – the main setter of interest in the London wholesale money market.

The Bank is worried that the rate still remains far too high and this is having a detrimental impact on the economy as a whole.

Ask any bank executive why Libor is refusing to budge and they will shrug their shoulders, say Libor is a force unto itself and much as they would love to reduce their bank's mortgage repayments they can't because Libor is too high.

But hang on a moment. Who sets Libor?

The answer is the banks themselves.

Every weekday morning the sixteen leading banks, including HBOS, Lloyds TSB, RBS, Barclays and HSBC, send estimates of rates at which their bank could borrow money at interbank rates that morning.

These estimates are collated by the British Bankers Association which discards the top four estimates as well as the bottom four, leaving it with the middle eight. They then find the average of the middle eight and there you have Libor. So it's no mystery force that sets Libor, it's the banks themselves.

It is time for our leading banks to start accepting some collective responsibility for the mess they've created and stop pretending they can't do anything about it.

This recession is going to be deep, long lasting and painful. We will all watch people we know lose their jobs, we will hear of people who can't afford to heat their homes, we will see people losing the roof over their heads as repossessions soar. Now is the time for banks to act responsibly after years of mismanagement and do what they can to put the country back on track.

They should start with Libor.

n Buy, buy, please buy is the message in the run-up to the worst Christmas for 30 years.

Retailers, fed up with empty shop floors and tills clunking hollowly at the end of the day, are taking an axe to their prices.

They're fed up of the doom and gloom on the high street, as punters opt to pay the mortgage ahead of restocking the wardrobe.

In a clunkingly placed bit of PR, Marks & Spencer revealed it is cutting prices today by 20 per cent in a one-off sale.

It times nicely with Debenhams' three-day 'Christmas Shopping Spectacular', with the department store also slashing prices by 20 to 25 per cent.

The problem is that for all the price-slashing they do, they're making life tougher for themselves in the long run because it sends out a bad message.

Cash-strapped customers are waiting for the 'Sale' signs to go up, and increasingly demanding lower prices. It's not uncommon to see bartering at the tills. So as lower prices become an ingrain-ed feature of shopping, a new monster could rear its ugly head.

Forget inflation – deflation is the buzz word now. Inflation officially fell this week to 4.5 per cent from a peak of 5.2 per cent in September and is predicted to fall further. It all sounds rather pleasant at first. Lower prices mean we've got more money to spend.

The problem is as prices fall, so does the value of companies, forced to sell their products at lower prices. This means they have less to invest and to pay staff, meaning employees are worse off. So business and consumer spending drops further, meaning companies are forced to drop their prices again to try to attract trade... And so the spiral continues in ever deepening circles.

Sales may be a short-term fix, but ultimately the retailers could be shooting themselves – and us – in the foot.