HOW should the UK and Scottish Governments react to the economic problems that will result from the latest stock market shocks?

First of all, when the facts change, the action needed changes too. So, it will be crucial to encourage investment locally.

Nothing is more important than stimulating the construction sector - small firms and large. One way to do this is to reduce the VAT rate. It is now of course at 20% - as from January, earlier this year.

It will be most interesting to see whether, even before the last week's market crash, the VAT receipts have risen proportionately - when the UK Government raised the rate by effectively one seventh - from 17.5% to 20%.

Fast to implement capital programmes are also needed. For various reasons, some good some not, it take a long time to deliver and implement such works - but we do need them now.

In turn this means that the powers required to borrow funding to pay for them are needed now.

The Scottish Parliament does not possess these powers, and although Alex Salmond and John Swinney have been arguing this case for years now, Westminster have as yet come up with words not actions.

If ever there were a need for swift action - it is now.

That VAT cut could even be temporary - as this is often a stimulus. And, those projects which people were thinking of doing - an extension to their house, a new garage or even building your own house - may well have been put off by money.

Many people will have thought long and hard about paying the UK Treasury one fifth of the total costs. That is what VAT at 20% has done.

So a reduction in VAT may increase the number of projects by encouraging custom. If that happens then there would be an increase in the amount payable to the Treasury - not a reduction.

This change I previously suggested to the UK, as have my colleagues in the Scottish Government. I sincerely hope that this time, someone from the Treasury is listening.

DID you create the recession? Did your neighbour? I thought not. Yet you are certainly paying for it.

Paying for it through your heating bills; paying the Government personal taxes - now the fourth highest in the western countries, according to some sources; and paying at the fuel pumps for your petrol.

Savers and senior citizens, often one and the same, are paying through the depleted value of their nest eggs.

There are not a long queue of people keen to claim credit for creating the recession - this one or the previous one.

But the bankers and the profligate spenders in Westminster must share some of the kudos.

For too many people, including myself, one of the most irritating facts of the time we live in is that the few so called banking leaders who so misjudged their trade to cause the recession, are still receiving bonuses.

In fact many of the bonuses were reported in the press just as we have landed in the latest trough of the recession.

I think that there should be an immediate pledge by every bank director for the foreseeable future that there will be no fat cat bonuses to be paid out.