But this property is in fact an experiment vital for the entire British economy, upon which George Osborne’s hopes for recovery rest. Mark and Lindsey’s pad is the second in Britain in an experiment in which you the taxpayer are invested for the next half decade.

The Chancellor’s Help to Buy scheme announced at the Budget has already started to help. There’s no getting away from the delight of the Faircloughs, only the second couple in Britain to complete through the scheme. “We’ve got our own home now and we’ve got big ideas,” said Mark. They got married last year, and now a home and a conservatory is plausible.

“Knowing what the mortgages are like now you need a 10 to 15 per cent deposit. We were renting as well as saving up for deposit: it was hard,” Lindsey told me.

Many couples like the Faircloughs have been hit by what the chancellor calls a failure in the mortgage market. Banks that made huge losses have been unwilling to lend to people with small deposits. Help to Buy gets round that by the government providing a loan to top up deposit which should increase housing market transactions from current low levels.

Housebuilders also build to order, they are delivered “just in time” to demand, rather than en masse. If more people move into new homes, construction – a weak part of the economy – will start growing again.

The CEO of Taylor Wimpey, Peter Redfearn told me definitely hundreds, maybe thousands of extra houses would be built because of the scheme, creating knock on growth. “It enables us to pick things up to build more homes on the sites weve already got open, and also gives us more confidence about investing in future sites and the infrastructure and land to grow the business,” he said. “We’re certainly talking hundreds… probably talking thousands – that’s creating more jobs, and more economic activity locally”.

The mechanics of the scheme are rather intriguing. Right now the treasury is paying between £20,000 and £120,000 in cash per home directly to housebuilders. It adds to the national debt for five years, but not the annual deficit, because the treasury takes a 20 per cent stake in the house. So it is borrowed money, but it doesn’t count as public sector borrowing instead a “financial transaction”. The banks fund 75 per cent, a less risky and therefore cheaper mortgage, and the buyer pays a 5 per cent deposit. It basically opens up affordable mortgages to buyers with small deposits.

Is there not a simpler solution to jump start the market? Why not let the market clear, and prices fall to reflect falling real incomes, weak economic growth? Indeed why doesn’t Taylor Wimpey just cut the prices of its homes?

“Life’s not that simple,” Redfearn tells me. He mentions the impact on local existing homes if new home prices were cut. “I don’t think it’s very desirable for people who have already bought from us, and people in the surrounding village. Everybody wants a certain stability in housing”.

Sir Mervyn King at the last inflation report press conference, expressed some concerns about Help to Buy. The bank’s financial policy committee will have the chance “to opine” over its impact on financial stability. He clearly thinks it must be temporary. These schemes have a habit of making themselves permanent.

A former Bank of England economist Danny Gabay, believes it risks a 30 per cent bump to house prices, and is “nuts” and “if we were asked to design a policy to weaken Britain’s long term growth prospects we could not have done much better than Help to Buy. The problem is too much debt, as the chancellor tells us. “It’s not public sector debt bad, private sector debt good,” he says.

Intriguingly the properties are often being marketed as if they have had a 20 percent price cut, even if the price booked does not. This illuminates a side effect of Help to Buy: who will buy a non-subsidised second-hand house in an area with help to buy new builds? And what will buyers do when the 5 year loan is due?

They either face an interest rate shock, a capital sum, or will have to sell the house, hoping that prices have increased more than 25 percent. The first 5 per cent loss will be borne by the buyer. Buyers we spoke to were clearly of the view that they would sort this out in 2018.

This scheme is about far more than housebuilders and individual homeowners. I understand that in conversations with the IMF, the Treasury have been keen to point out H2B and the Bank of England funding for lending scheme as examples of their willingness to stimulate the economy. Yes a stimulus using borrowed money that increases public and private levels of debt in order to boost the economy. Do not confuse this with a “Plan B”, which involves extra borrowing to boost the economy in order to borrow less later. The boost is hardwired until after the next election. Help to Sell, or Help to Buy an election are the more critical nicknames for the scheme.

Help to Buy is designed to create not just more room for the Faircloughs, but for the Chancellor too. It’s not without its controversy. More on the IMF verdict tomorrow.

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There is little sign that the Treasury or the chancellor is getting carried away with this, and rightly so. 0.3 per cent growth merely makes up for the fall in the previous quarter. Growth has been flat for six months. Of course it could have been worse, but it is a relief that there is now no new recession.

Longer term, however the picture is unchanged. The economy is flat to very slowly growing, liable to be hit by any shock that comes its way. The chancellor’s original deficit reduction plan pencilled in 7.1 per cent growth by now. In his time at Number 11, we have had 1.8 per cent. Since the spending review, that was 6.5 per cent, and we have got 1.2 per cent (although that was negative last year, so it’s progress).

Services have bounced back alongside the stabilisation of the eurozone. Production did not do too well, but was helped by a reversal of the North Sea oil outtage. Construction recorded an appalling figure of -2.5 per cent in the quarter. It is not difficult to see where growth might come from.

So a neutral end to a bad few days for the Chancellor.

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Talking to those behind the scheme, I would suggest, at best, that it is on caffeine, perhaps ProPlus.

There are three interesting changes being made to the scheme launched last summer, which has succeeded in cutting funding costs for banks, borrowing costs for good credits, and failed to increase small business lending.

First, it will be extended by a year.

Second, it will contain strong incentives to increase greatly lending to SMEs (defined as annual turnover under £25m). Some £10 of subsidised funding will be available for every £1 of additional SME lending this year. Next year this falls to a still generous £5.

Third, some non banks such as leasing companies will gain access to the FLS.

Nothing to complain about here. All sensible stuff. It might still be argued that this should have been done two or three years ago. Clearly it is an implicit admission that four waves of coalition efforts to boost business lending from relying on low gilt rates, to Project Merlin, to the National Loan Guarantee Scheme, to FLS 1.0, have failed to have the desired effect.

Furthermore, the Bank of England now does privately acknowledge that the scheme has coincided with a notable fall in savings rates as banks no longer have to rely on ordinary funding from ordinary Britons.

Also, it seems as if the Bank feels that its impact will only be at the margins. It appears to see the scheme as more of an insurance policy against a sharp rise in SME loan rates - as experienced during euro crisis flare-ups - rather than something that will lower current rates further. Hardly an anabolic stimulant, perhaps more like a double espresso.

I do detect something interesting from the Treasury approach to this. The Treasury sees this scheme as a stimulus. It knows there is a need to be seen to stimulate the economy. A cynic might question the timing, the day before we expect another round of disappointing GDP figures. The Treasury will argue that this is entirely in keeping with its Plan A strategy of fiscal conservatism and monetary activism

Even more intriguing is something I discovered and confirmed with the Bank of England. One of the extensions announced today will be the incorporation into the scheme of previously barred “specialist lenders” in the mortgage market.

This is a euphemism for specialist buy-to-let (BTL) and high loan-to-value lending units of banks, but also stand-alone companies. I presume this means that companies such as Paragon and Precise will now be in receipt of central bank subsidised funding to lend to landlords.

Support for BTL was specifically excluded from the Treasury’s Help to Buy scheme, because it was seen as controversial to use taxpayer backing to support landlord’s speculative home hoarding.

Is this not the case for the Bank of England too? It is clear that a sweep of banks have relaunched or greatly expanded their BTL offering on the back of FLS 1.0. The very cheapest (interest only) mortgages are now solely available to landlords.

The Bank claims it should not be making normative judgements about where to lend into the economy, that is for commercial banks. But its subsidy for SMEs is a normative judgement (and the FT’s Chris Giles points out that today’s other extension to “unincorporated SMEs”, could see a further expansion to cottage landlord businesses).

At one level, neither the Treasury nor the Bank of England should really attempt to justify the FLS on the basis of helping “first time buyers” and small businesses, when the reality is that much of the subsidy is ending up helping augment landlords property portfolios. Or if they do, please can we have the numbers on Buy to Let?

At a bigger level, the taxpayer-backed incentive to housing financialisation and speculation, and the disincentive to save appears to be the absolute opposite of the Coalition’s much-vaunted “rebalancing”.

There was a sniff of this around “Help To Buy”. The housing market seems to be being primed for a “beautifully” timed 2014/15 credit bonanza, that will sustain house prices.

The economic opiate of a house price stimulus for a chancellor near an election seems to remain as strong as ever in a coalition committed to rebalancing.

In which case this is not economic policy on steroids. It is economic policy on smack.

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Today’s impressive Tyrie commission report into the profound and epic failure of HBOS got me thinking. HBOS, only alive for seven years, would come very high in any poll of the “worst bank in the world”.

It was an epic failure, well documented by the journalist Ian Fraser in his terrifying timeline, and in Ray Perman’s book Hubris. Last week I found myself inside the Bank of Cyprus headquarters with some understandably fed-up workers. In the foyer I found a host of gongs from financial media celebrating BoC being the eastern Mediterranean’s best bank.

Famously, Anglo Irish received the title of  “world’s best bank” from Oliver Wyman on behalf of the good burghers of Davos, just a few months before bringing down the finances of the entire Republic of Ireland.

Personally, I’m going with Bankia/Caja Madrid. I didn’t want to, but ended up writing a whole chapter of my book about Spain seen through the eyes of this abominable too-big-to-fail monster, created after the 2008 too-big-to-fail crisis. For the purposes of my vote, I include the financial incompetence exhibited by the savings banks Caja Madrid and Valencia-based Bancaja that formed Bankia.

Rules: this is the “worst”, not “most evil”, one per country. Surviving intact suggests at least one dimension of basic competence, so this is a list of bust and formerly bust banks. This is my shortlist of six:

Anglo Irish, Ireland

Cost 30bn euros, bankrupted Ireland, drove it into a troika programme. Terrible lattice of insider lending into small number of property boom-connected parties. Remnants recently liquidated. Read “Anglo Republic” by Simon Carswell. The children of Irishmen and women not yet born will still be repaying this debt in the 2050s. “Best bank in the world”, 2007.

Bankia, Spain

As Caja Madrid and Bancaja, these two savings banks were bad enough posterboys for property insanity, local government vanity projects, and friendly loans to construction companies. There is a layer of government complicity on top.

And then we have the overarching folly of the merger to create a too-big-to-fail institution AFTER everyone had worked out this was a disaster. Largest loss in Spanish history last month. Hundreds of thousands of pensioners lost money that they thought were savings, but were now worthless preference shares. Funded Ronaldo’s transfer to Real Madrid (!) and then repoed him at the European Central Bank. Stupidly shaped HQ.

HBOS, UK

Appallingly run bank that only lasted seven years. A one way all-encompassing bet on UK property bubble. Massive bonuses paid for a high street bank. Boss knighted, appointed to the regulator, and then asked to review mortgage market by Gordon Brown.

Corporate lending terrible too, pioneering hedge fund-style equity stakes. The nadir of UK self-regulation. Read Hubris by Ray Perman. Had to be rescued by Lloyds. Shocking report published today by Parliamentary Commission on Banking Standards. Annoying adverts.

Kaupthing, Iceland

Fourth biggest bankruptcy in world history. Appalling “shopping”, as Iceland’s central bank governor once told me. Appalling funding model included UK grannies, when the rest of the world gave up. Appalling cross-shareholdings.

Lending to shareholders revealed by Wikileaked lending book. Again bankrupted an entire nation, requiring massive devaluation, capital controls still in place. Questionable links with politics and industrialists.  Throw in Landsbanki and Glitnir and you have three of the top 12 bankruptcies in world history, from a country with the same population as Coventry.

Lehman Brothers, US

Largest bankruptcy ($120bn) in world history by a long shot. Instrumental in supersizing subprime boom after offering full service mortgage supply line from house to derivative. Caused collapse in world trade, and massive recession all around the world.

Laiki (Popular Bank), Cyprus

Again, a bank that essentially, effectively brought an entire nation to bankruptcy. The end result here saw capital controls, the longest western shutdown of a banking system since the 1930s, restrictions on the use of credit cards and the export of bank notes.

Its forced liquidation also led to massive losses for depositors in the largest Cypriot bank, Bank of Cyprus. The most egregious failures at Laiki concerned the continuing purchase of Greek government bonds even as every man and his dog knew they were about to get a large haircut.

There was also what former Laiki audit chair Chris Pavlou told me last week represented “very dodgy lending” in its Greek subsidiary. In its collapse, however, the role of incompetence at a European level, and the need to protect Greece from the consequences of bad lending in the Greek unit, also loom large.

Other suggestions from Twitter include: Monte de Paschi, Italy: Dexia (France/ Belgium); and Fortis (Belgium/ NL). I’m open to suggestions, but not convinced they rank in the big league.

You can cast your votes on our Facebook page here or in the comments section below.

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Today draconian rules on withdrawing, exchanging, and exporting currency too. But the inside story of what led to this, is more remarkable, even than that.

The fate of this nation has been determined at late night, often botched, negotiations in Brussels, where Cyprus was considered too small to have to bail out.

Chris Pavlou, a Cypriot and former leading British banker, was at the heart of financial discussions in Nicosia with the President, regulators, and the Troika.

Until last week he was vice-chairman of Laiki also known as Popular bank, Cyprus’s second biggest. He spoke to Channel 4 News exclusively.

Channel 4 News: “It does seem as if Berlin or Brussels or Frankfurt were very keen to communicate to Cyprus’ leaders that ‘you’re not systemic, in some ways you don’t matter, you have no negotiating power’.”

Pavlou: “Unfortunately that’s what they said, yes. Unfortunately yes. And it’s not very nice actually to see two or three people half your age, clever people, coming over there and shaking their hands at the President and saying ‘you have to do this, otherwise we’ll bring you down’.”

C4N: “30 year-olds?”

P: “Well 30-35 year-olds. It is very painful for somebody who’s just been elected to actually face that.”

C4N: “Humiliating?”

P: “At best.”

There is telling footage of a shocked Cypriot finance minister Michael Sarris in Brussels 11 days ago, as his 16 eurozone colleagues agreed a first botched bailout after 10 hour meeting.

That proposed bailout brought in cuts to all Cypriots and foreigners’ savings. hitting small savers was a Cypriot inititiative, though signed off by all, but it would have kept the main two banks including Laiki, alive.

However a week ago it was spectacularly rejected by MPs – amid euphoric protests, the opposition leader triumphant about facing down the troika when I spoke to him then, suggesting the troika had gone too far, and needed to learn a lesson. Celebrated at the time, it turned out to be a calamity.

PAVLOU: “The second time we went to Brussels, the government went to Brussels, and they came back with a situation that was twice, three times, 10 times worse than the original one we rejected.

C4N: “So the government has accepted a plan that was three times worse than the original plan?”

P: “Yes, everybody knows that, everybody knows that the one we accepted in Brussels a couple of days ago is many many times worse than the original one that they gave us and the House of Parliament rejected.

C4N: “But that would have hit small depositors?”

P: “Yes, it would have hit small depositors, but the amount that they would be forced to pay, it was something like one and a half year’s interest.”

So there’s sufficient blame to go around in Cyprus. There can be no doubt that the system became too dependent on Russian deposits. But looking at actual data rather than hearsay, innuendo, and never-published German intelligence reports, it is pretty clear that the sharp rise in “Russian” deposits over the past half-decade is nearly exactly matched by a sharp rise in deposits from within the Eurozone.

All roads lead to Greece.

A deal signed off this week saw the Greek subsidiaries of Cypriot banks snapped up by a lucky Greek bank, that has seen its share price rocket.

That’s not even the half of it. The key sticking point in troika negotiations was the status of these subsidiaries. Why? Because there were awful corporate loans in some of them.

Something odd happened.

The end result: Greece and its banking system were spared any sort of default or haircut, for losses arising wholly in Greece. Cyprus was left holding the baby. Greece exported its bank default to Cyprus. And the people running the Eurozone were left without yet another Greek headache in a politically sensitive year.

Mr Pavlou, the chairman of the Laiki audit committee, says he was shocked at what he found in the Greek subsidiary of his Cypriot bank. Billions were lost when the EU arranged a massive cut to Greek government debt. But as much was also lost in opaque lending by the Greek unit of the now defunct Laiki.

Pavlou: “In some of the loans in Greece, there was absolutely nothing behind it. Collateral was almost zero, and very low interest rates.

C4n: “So very low interest rates, we’re talking multi-million pound deals…”

P: “Multi-million pound deals, very low… ”

C4N: “Sketchy connections maybe, between the bankers and the recipients?”

P: “One could find evidence of some connections there, yes. A conflict of interest.”

C4N: “Would you say that that subsidiary was rotten?”

P: “I wouldn’t use the word rotten, because there was a lot of people working there.”

C4N: “There was a lot of rotten lending in that subsidiary?”

P: “In the UK we used to use the word ‘dodgy’. I think some of the lending there, some of the practices were very dodgy.”

C4N: “Yet this is the part of the bank, which was if you like, the cancer within the bank. Where have those losses ended up? Have they ended up in Greece?”

P: “They ended up in the bank. Greece was part of the bank. Yes. Some of the losses were taken, we have taken some 5.5bn euros worth of losses, and there were some other expected losses. And I understand that when the Greek parts of the Cypriot banks were sold to Greece, all the expected losses were covered by the Cypriot taxpayer. ”

As people continue to protest… helicopters buzzed around Nicosia. To police a riot? No.

Amazingly in four Green lorries, with armed and chopper-escort, the European Central Bank had delivered billions of euros for Cypriots to extract if they want to when banks reopen at some time today.

Just in time delivery. Incredible economic history in the making. Mainly, of the wrong sort.

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The impact on people has been rather heart-wrenching. People keep on coming up to me and the Channel 4 News team at parades, protests, on the Green Line, wherever, with their stories.

I wanted to share longer versions than is possible on our news programme. Please watch.

Stella, a mum, and a worker at the Bank of Cyprus who I met inside the HQ at a rally against interference from the Central Bank:

Rebecca, mum of three, a teacher from Larnaca, at the Greek Independence Day parade, whose daughter was on the parade, who felt that it should have been cancelled, on her fears for the future of her children:

Christina, Helen and Andrea, high school kids, protesting on a 3,000 strong march of Cyprus’s young, who left classes at 11am yesterday on a Twitter/ Facebook organised demo at the Presidential Palace:

It reminded me of the scene from the Argentine film Nine Queens about the corralito. “Exo i Troika tora” or   “Troika Go home now” they chanted to the tune of the White Stripes’ Seven Nation Army.

Banners declared “Your mistakes. Our future”. Schoolkids and students really do think that the European Union and IMF are stealing their future.

At 11am Nicosia’s schools emptied as they rushed out on the streets, in their thousands, marching on the presidential palace to vent their anger at Cyprus’s incredible financial collapse.

“Fight on, with all your voice until you can’t shout anymore… for your country, for your parents,” shouted one young girl.

In Argentina it was housewives bashing pots and pans against their savings being trapped banks. In Cyprus right  now it seems to be  children organising through Facebook and Twitter, but with none of the violence that you witness in Athens.

Relaxed police chatted with the kids. But they weren’t taking any chances, behind the presidential fencing, riot police were ready, emotions are high.

Taking their cue: protesting bank workers. They received texts to mass at the HQ of the stricken Bank of Cyprus, after its boss resigned in the morning.

Stella, a bank worker and mother, welled-up with tears explaining to me that all she wanted to do was work to help her family and her bank pay back its debts.  The clerks and office workers marched on the Central Bank next door. They are not great fans of the Central Bank Governor Panicos Demetriades.

Yesterday a deal to transfer its deposits along with the other deposits in Greek subsidiaries of Cypriot banks to Greek bank Piraeus, was signed off. Many eyebrows in Nicosia are being raised at the rather low price. I have much more to report on this tonight.

In three hours we are told that finance minister Michael Sarris will finalise capital controls for this island, including numbers on limits for withdrawals, the renewal of term deposits, and currency export controls.

I’ve done extensive work tracking such moves in Iceland. Four and a half years on they are still finding it impossible to lift controls on foreign-owned krona, so-called “quick krona”.

Icelanders are limited to £1,800 of foreign exchange, which they must return if their trip is cancelled. Sarris promises these Cypriot limits will last just weeks. He has to, otherwise it would be basically incompatible with EU membership, let alone eurozone membership.

It’s already the longest bank shutdown (for financial stability reasons) in recorded economic history. Longer than Argentina, Uruguay, Ecuador, Credit Anstalt.

With anger stirring from bank clerks to kids, no one’s certain branches will reopen on Thursday.  When they do reopen it will be with the help of unarmed private guards from G4S.

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A geopolitical divide running through Cyprus that’s even difficult to see at street level, until you stumble into the border guards. And then it becomes very real. Off limits for nearly four decades, streets are still deserted since the island’s partition.

On the Greek side of the line yesterday a D-Day of sorts – their fate in the single currency decided 2,000 miles away at a meeting in Brussels of their president with the Eurozone and the International Monetary Fund. The limits on cash withdrawals squeezed again to €120 as the bank vaults run dry. A week ago it was €600 plus.

The key sticking point was a desire by Cyprus’s rescuers to wind down Bank of Cyprus, which holds many of the deposits of Cyprus’ political and legal elite – a desperate attempt to resist pressure from the troika and keep some sort of offshore financial centre on the island.

On the north of the island, you can’t move for the flags of the self-proclaimed Republic of Northern Cyprus and its protector Turkey, but something here is moving.

The troubles of the south might change this island forever. The man who called himself the Mayor of Nicosia or Lefkosa from 1976-1990 (a title hotly-disputed in Cyprus proper) said he felt strong human sympathy for what was going on in the south.

If you travel further north on pristine motorways, paid for by the now booming economy in Turkey, you stumble across something extraordinary resting on the beach: piles of giant steel pipes, made in China, that will soon form a 50-mile pipeline of drinking water from Anatolia to North Cyprus.

At that point the north will have the drinking water and the south the gas. The Turkish Cypriots think it will help their bargaining power in any unity talks.

Also now it is the north that is growing, and that has open banks, and the south that has capital controls – in a week, when the sands have shifted hugely in Turkey, Israel, Russia and in the Eurozone. It is complicating negotiations and calculations about whether Cyprus will be allowed by Brussels to fall.

And its leaving the north Cypriots smiling.

In Turkish Nicosia, there’s a spot of schadenfreude at the fate of their neighbours, but when we spoke to the prime minister, unifying the island is back on the agenda.

Irsan Kucuk, who is the leader of the Turkish Cypriots and calls himself prime minister (though again this is disputed in the south)., said:  “Of course, I see this as the accumulated effect of many years [of their system]. I can say that the juncture they now find themselves at, has not come as a surprise to us.”

He said that depositors were welcome to put money in the banks in the north, which were “safe and stable”. But he also felt that better conditions may now exist for unity and peace.

“My opinion is, thinking logically, and considering the people in both countries and caring for their livelihoods and welfare, this could lead to relatively more positive developments.  The process could take a more positive direction, one would think,” he told me.

Cash strapped southern Cyprus was banking on using its gas reserves as a security in any bailout. On Monday Turkey proper waded in, the foreign ministry saying that was “dangerous”.

Last week President Obama on the tarmac next to air Force One, made PM Netanyahu of Israel apologise and promise to compensate Turkey for the deaths on its 2010 flotilla to Gaza. Just in the past few days Turkey has made up with the Kurds who have epic supplies of oil that need to cross Turkey. It has also made up with Israel which had been lined up as Cyprus’s gas partner.

It is said in Germany that Angela Merkel’s chancellery and Wolfgang Schaueble’s finance ministry agreed that economically, Cyprus doesn’t matter, that in the jargon it is “non-systemic”.

But Merkel, perhaps unlike her finance minister, does believe Cyprus is geopolitically vital. This is perhaps what is keeping Cyprus in the euro for now.

But this crisis is not just about ATMs, banks and deposits.

More on the economics and the deal later.

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The actual reason I did not have to write is that not a lot happened. When I reported on the zombie economy on Monday, I did not expect a zombie budget on Wednesday. The forecasts were worse, the borrowing numbers were worse. The national debt is massive and epic, though it is worth remembering that we have minimal refinancing risk on the UK sovereign.

The proportion of GDP required to service maturing debts over the coming year is very low by European standards. We have a long-term mortgage to repay (actually I doubt we ever will, but let’s not go there), not the infamous credit card bill analogy  (one day, in his memoirs, George Osborne will thank Gordon Brown for virtually doubling the average maturity of Britain’s bonds to 14 years).

There was the usual absurd accounting fiddle on this occasion to get this year’s borrowing number below last year’s. I’m glad to say we spotted it on the show after the budget. There was a lot of hot air from the opposition about the “spare homes subsidy”, but I find it inconceivable that this is, in any way, the intention of the government. Not ruling out ways to help first-time buyers with parental support (legally a second home), or in divorce case, is reasonable. The Lib Dems were floating taxing second homes last month; whatever their coalition contortions, they won’t go for subsidising them.

The big thing for me, however, is strategy. George Osborne is emerging into a master tactician and an apprentice strategist. “Help to buy“, the system of mortgage support and guarantees, is brilliant tactics, but bad strategy. The most convincing coalition narrative for their strategy of fiscal conservatism and monetary activism starts with a recognition of a wave of liquidity coursing through the world in the 2000s.

Labour harness it as a production industry called the City. They divert a proportion of it into unsustainable tax receipts, misjudging that the buoyancy will be around forever. In conjunction with a Bank of England that misjudged the Chinese deflationary genie as proof of inflation-fighting credentials, a largely unregulated credit boom, levering in hot money from all corners, poured into UK housing and credit.

The coalition knows that housing booms are bad.As James Mackintosh of the FT suggested, other countries respond to high house prices by limiting bank mortgage lending. In Britain, a free market Conservative chancellor gives it a further subsidy.

That the housing market has not crashed, but deflated a bit, is a miracle of policy, accident, devaluation and immense safe haven fortune by both governments since 2008. But the chancellor’s strategy of focussing on the perils of public but not private debt will not refloat long-term growth in Britain.

I spoke yesterday to a leading German banker. He said there was nothing in Britain for him to invest in. He has vats of capital to invest long term. Britain is devaluing and inflating its housing, and has no imaginative strategy for long-term growth, other than clinging to the City and overpriced housing. Right or wrong, he matters, and this is what he thinks, privately.

Mortgage schemes might have a role, of course, in giving the economy a short-term cyclical boost. I’m intrigued by what emerges from the consultation. It must be a concern that buyers will be left with mortgage repayments completely dependent on 0.5 per cent base rates. A mortgage of the living dead, from conception. Enabling priced out buyers of homes to accommodate and realise high house prices is so well down the list of Britain’s economic to-do list, and arguably well up the not-to-do list.

To believe that £12bn of risk guarantees and £120bn of mortgages is any type of priority when Vince Cable wanted more money for his business bank beggars belief. To effectively direct scarce bank capital towards extra mortgage lending, and at the same time present a list of unfunded yet crucially needed infrastructure projects, makes no sense.

To critique the notion of a “magic money tree”, and then immediately create a magic money forest of mortgage guarantees that don’t count as public spending, is baffling. Half of all mortgages in London are interest only. Interest only is effectively being phased out except for buy to let. This comes out of pressure from the FSA. If interest rates go up, and they need to refinance, where do these mortgage holders go? Actually, the reality is that many of these people do not really own their houses. They think they do. They are at most being leased.

This is the very zombieism that I tried to get across on Monday’s show. Something similar is happening in business. At least if you are propping up zombie businesses there are some productive returns and employment gains. In housing? Not really. Support should help restructuring etc.

Marry this with Carneyism and the first tweaks to the Bank of England’s inflation remit in 15 years (alongside the chancellor’s description of interest rates being “lower for longer”) and you do have a recipe for a pre-election housing bump. I note, in passing, that despite a unanimous view from both Balls and Osborne that taxpayer backing should NOT be used for buy-to-let mortgages, Lloyds, RBS and others have lowered savings interest rates and funded buy-to-let by using the Bank of England’s funding for lending scheme (funding for landlords, as I suggested last week). The Treasury select committee should urgently demand an explanation and the figures on FLS buy-to-let. What is the role of the state in supporting speculative hoarding of property during a housing shortage?

All told, this looks like can-kicking in private debt that the chancellor says he abhors for public debt. We had the boom, the panic, the crisis, and the rescue. Britain now needs the housing market to clear. It is holding back labour mobility and productivity. If our sovereign balance sheet is to be lent to the private sector, it should be to industry, entrepreneurs, and infrastructure. That would be the rebalancing that the chancellor says he wants. Otherwise “lower for longer” might just end up referring to Britain’s structural rate of growth, as it did in Japan.

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Little Cyprus, one five-hundredth of the Eurozone economy, had faced down the mighty Troika. I spoke to opposition Leader Andreaus Kypranou of the AKEL party as he triumphantly strode through the crowd.

The Troika had gone too far, he told me, and they should learn a lesson.

As I left Larnaca Airport in the early hours of this morning I noticed the empty “currency declaration” and “cash controls” counter.

Yet there were flights:

• one by the RAF of bundles of euros for British squaddies,
• one by Eurosystem banks to fill the cash machines,
• one by Russians meeting their lawyers about their bank accounts,
• and one, the flight of capital that everyone expects when, or indeed if, the banks reopen anytime soon.

My flight took off past the private jet parking lot of 13 planes, which I am variously told is “very close to normal” and “totally abnormal for March” by different Cypriots.

By the time I return to Cyprus, it is certainly a possibility that this island will have capital controls. I mentioned the possibility at the end of my TV report last night (see video above).

The Wall Street Journal ran a scoop late last night about collaborative efforts to make contingencies for capital controls in Cyprus. If that is the case, expect officers at that currency declaration counter to be physically searching people trying to leave Cyprus with more than a maximum defined stash of euros.

The Cypriot Navy might be a little busy too.

Of course, in essence Cyprus already has temporary capital controls with the announcement of impromptu bank holidays.

It’s worth getting across just how extraordinary this development was already. The last time it happened across a banking system over multiple days in Europe, was the collapse of Austrian bank Credit Anstalt in July 1933.

Latvia in 2008 is the only event in Europe that gets close, but that was principally one bank. Other than that it’s Latin America, and the bank run-ridden Jimmy Stewart era of the US in the 1930s.

Jacques Cailloux of Nomura has amassed this table with the help of the IMF’s systemic crisis database and academic economic history.

He quotes Roosevelt’s fireside chat of exactly 80 years ago:

“It needs no prophet to tell you that when the people find that they can get their money — that they can get it when they want it for all legitimate purposes — the phantom of fear will soon be laid”.

Sadly Wolfgang Schaeuble, Angela Merkel, and in particular the farming economics specialist who claims to be running the Eurozone – Dutch Finance Minister Jeroen Dijsselbloem – are more PR than FDR.

Perhaps it’s Draghi. He’s disappeared since Saturday.

Here’s the thing. In 1933, Roosevelt stopped the runs after the bank holiday by essentially creating deposit insurance. In 2013, the incompetents and inadequates liberally sprayed across the Troika, have created a pent-up demand for a bank run by stopping deposit insurance.

US Bankers put out this statement on Cyprus on Monday. “Depositors in US banks are insured up to $250,000 and no insured depositor has ever lost money in a bank failure. … Simply put, US insured depositors are safe and their deposits are protected by a strong FDIC fund, a financially secure banking system and the full faith and credit of the U.S. Government”. Can you imagine the Eurozone version of this?

I have been told that so self-satisfied was one north European AAA creditor nation’s delegates at the moment Cyprus caved in to singeing its own depositors in the early hours of Saturday morning, that they high-fived each other. “Gimme Five? Billion of Deposits?”

Budget coming. Let me present the counterargument to this rampant Troikaphobia later.

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