I'm not being silly about this. The natural progression of economies and markets is by the cycle - up and down, bull to bear, boom to recession and back again.

Straight unending growth with no halts along the way is not natural. We have a word for this when it happens to ourselves. We call it cancer.

What is happening at the moment in the United States is entirely natural. For 15 years, Americans went on a residential building boom that saw their expenditure on housing construction quadruple. It came to a halt two years ago and housing starts since then have plummeted, with home prices now also tumbling.

The big problem lay not in overbuilding, however, but in overfinancing. The New York financiers got too clever for themselves and devised ways of securitising mortgages, which seemed to offer creditors good credit assurance but did not actually do so.

You can also say, of course, that shifty salesmen conned ignorant junior bankers into buying pieces of paper none of them really understood on the basis that ratings agencies, which also did not understand these pieces of paper, said nonetheless were safe to buy.

However you look at it, it has proved to be a costly mistake, both for the US economy and for the lenders left holding these pieces of paper, many of them international banks.

The price for mistakes of this nature and size is recession, with a good deal of immediate fallout outside the US as well in this case because of the international presence in subprime mortgages.

There is really no getting around it and the Federal Reserve is unlikely to stave it off by cutting interest rates. Bankers are not in the mood to lend just now, however low their cost of funds, however great the margins they might have in prospect.

They wish to know first how extensive this crisis will become. They don't have margin of interest on their minds at the moment. It is loss of principal they are considering and this is exactly the way they should think. We call it prudence. We expect it of people with whom we deposit our money.

What recession does is shake out weak industries that are likely to disappear anyway but would linger pointlessly to a slow death without recession. It also shakes out weak industrialists who haven't paid proper attention to their finances. It clears the deadwood off the ground for the next economic advance.

Yes, it hurts, but the pain of the economic injuries can't be avoided. Recession gets the bad news over with quickly and lets people start again. It's like ripping the bandage off rather than taking it off ouch by ouch.

Most of all what recession does is remind people that risk is called risk because you could lose your money. It makes you careful with your money. Financial horror stories and riches-to-rags tales have a very good effect that way.

But if governments do not stand aside and let recession clean things up when excesses in the economy have produced a mess, they court some great dangers.

First, they stop this broom from sweeping out moribund industries and incompetent industrialists. The result is that an economy that has gone off the rails stays off the rails or takes much longer to get back on them. It is misdirected into continuing to put its effort where that effort no longer has the best possible results.

Thus, let's hear it for bankruptcy, a wonderful tool for keeping any economy fresh and vigorous. I sympathise with those who suffer but can console them that their agony is not prolonged this way.

Second, intervening to try to stop a recession gets in the way of making people prudent with their money. It encourages them to take bigger risks next time or to believe that the risk does not exist at all because government will always bail them out if things go wrong.

This is called moral hazard and it is very real hazard. Investment quickly becomes gambling then and the excesses become wild. The result is always the same - an eventual thundering crash, a recession turned into a depression.

And if you don't get the thundering crash, you get the Japan Syndrome - almost 20 years of stagnation because the authorities refused to accept a recession in 1990 and wasted all their treasure in futile attempts to pretend that it wasn't happening.

So I ask again, why head off recession? When it comes you meet it, you accept it as a natural part of the cycle and you get it over with as quickly as possible so that you can start once more.