Why do I pick it up again? Because the situation is no different but worse, Galbraith's answers are very much up-to-date and the recipes to solve the crisis explained how insolvent banks should be dealt with:
In a situation when a bank has suffered losses sufficient to impair its capital, you need to have regulatory supervision in place.
This does not mean that you necessarily close the bank. The way it usually works in the USA is that a bank is closed on Friday and re-opened on Monday under a new name, with a new leadership and with a team of examiners who are going through the books, trying to sort the good business loans and personal loans from those which are hopeless. Then you isolate the hopeless stuff, you force a write down of the equity and the subordinated debts of the people who put in risk capital -- so they have to take their losses as they should. And then you break up the bank into pieces which have a better prospect to gain viability soon. That's a process of re-organization and re-capitalization.A change of management is essential, because firstly, the incumbents are responsible, whether they were culpable or not, and secondly, you need new people who are in line with the public purpose of this re-organization. It's the same principle in the navy: When a ship runs aground, the captain is removed, no matter if he caused the accident or not. No one would think it's a good idea to have the subsequent investigation headed by the ones who are to be investigated.
Any kind of stimulus programmes, any new debts or any new, distortable balance sheets (e.g. EMF or similar) will not offer any sustainable solution unless independent governments are setting and enforcing new rules for new banks; I don't see those coming and I also doubt any new government will be anywhere near a position to finally clean up the mess.
So the crunch(-es) will go on; the credit-crunch will feed the EURO/currency-crunch, the climate-crunch will enhance the water- and energy-crunches or all vice versa; we better get used to it.
Btw: are you aware of an island called "Diego Garcia"? Or "Camp Justice"? It would not be the first time the world would seek its hail in war; preparation is on as you can read in the HeraldScotland.