These are difficult economic times. It is almost impossible to switch on the television or read a newspaper without hearing about worsening financial conditions. Banks have been in danger of collapse – in some cases have collapsed – and stock markets around the world seem to lurch from one crisis to another. At the time of writing this, the Japanese stock market had fallen to its lowest level since 1982. It is estimated that an astonishing £1.8 trillion – not million, not even billion, but trillion – have been wiped off the value of financial firms. I don’t even know how many zeroes that is. These are truly astronomical figures, to reflect the unusual times. The Prime Minister said in the House of Commons last week that the financial markets face their most turbulent times since the First World War.

I think there are two conclusions from all of this. The first is that these problems are global in nature and scope. The difficulties we are currently facing are not the consequences of a policy decision made in London, but are the effects of a global economic downturn the likes of which we have not seen in decades. The second thing is that the so-called real economy cannot be insulated from the problems of the financial markets. I have written before of my concern that if banks do not lend, things like buying houses, decisions about buying a new piece of plant for a factory, or expanding a business simply do not take place. The fall in stock markets will have a real impact on someone’s pension. This lack of confidence and uncertainty affects job prospects and house prices.

Given that the problem is global in scale, the question is what should our government do in these circumstances? The answer will depend very much on what you think the general role of government should be. There is a school of thought that states the government should do nothing. If anything, the government should cut public spending as much as possible. This is all part of a natural cycle, as sure as night follows day. Let the market correct itself and we will see prosperity.

This very much depends on a belief that the markets are efficient and somehow sensible. I think the events of the last few weeks show that they are anything but: the herd mentality of the free market means that crisis will follow crisis.

There is another school of thought which suggests that governments should intervene to try to lessen the harsh impacts of an economic downturn. Governments should borrow money and bring forward investment to kick start the economy and retain as much as possible the skills needed to produce economic confidence.

I agree with this approach not only because I think government should intervene, but also when I look at what is happening around Hartlepool, and is being planned for the near future. We have a share of £1 billion of housing market renewal money to transform the centre of town. There are hundreds of millions of pounds allocated to transform primary and secondary schools, as well as the Sixth Form and the College of FE. I know that it is controversial, but there is a hospital planned which will be cutting edge in terms of treatment and will cost another half a billion pounds. £350 million is being pumped into the North East to retain skills in small businesses. All of this is public money: I haven’t even taken into account the potential economic benefits and skills that might come from a replacement power station in Hartlepool.

All of this investment in the next five years is under threat if you take the view that government shouldn’t intervene in an economic downturn. This is what the Conservatives are currently arguing in Parliament. I look around at what is happening in Hartlepool and believe strongly that we should borrow now to provide the infrastructure, and retain the skills needed to weather this difficulty and come out the other side better placed to compete with the rest of the world. Hartlepool will suffer as a result if we don’t.