A way to make a market-based economy work.

We must live and work somewhere, and if properties are held underdeveloped or vacant without having to pay their annual value to the public purse, their prices will be bid up into unsustainable bubbles such as we've recently experienced, and we'll be forced to extend the urban sprawl into our hinterlands.

As we're beginning to discover, the calamitous financial bill must eventually be paid for this tax-induced misbehaviour.

Meanwhile, Wall Street continues to print money to save the US from economic depression whilst, alternatively, Europe prescribes sackcloth and ashes for errant Ireland, Greece and others.

Both approaches are doomed to fail.

There's an altogether different remedy that will work, but which nobody is seriously investigating. It reverses the process that got us to this point.

First, debt that can't be repaid, won't be repaid, so banks must write back their assets to non-bubble inflated market prices. They oughtn't have accepted bubble-inflated real estate prices as loan collateral in the first instance, and, having done so, shouldn't seek to dispossess borrowers who can't meet their originally impossible repayment arrangements. Loans must adjusted accordingly. Banks that fail as a result will undoubtedly be purchased after due diligence is undertaken on their true asset values.

Secondly, tax regimes should switch from taxing 'goods' to taxing 'bads' as soon as practicable, in order to resuscitate foundering economies. This involves capturing more and more economic rent from land and natural resource use, and less and less from taxes on labour and capital.

This is the only real recipe for successfully addressing collapsing markets and civil unrest, but I'm not confident bankers and politicians are willing to listen to the voices in the street.

They seem to have a preference for the one percent.