After a scary week on the stock market, politicians (Alistair Darling) and business leaders (Sir Win Bischoff, Chairman of Citigroup)are beginning to admit that the world's economic problems are set to stay for quite a while. that while now looks like lasting until the year after next.

This week looks as if it may have marked the point at which the financial problems start to recede and problems in the real economy start to assume more prominence with job losses being the most serious.

After the falls in bank shares earlier in the week and the recovery on Thursday and Friday, hopefully the point of maximum panic by the finance industry has been passed. The better-than-expected results from US banks seem to have been the mean reason for the recovery. Does that mean that the bad news about non-performing CDOs has passed its peak? I'm expecting that there will be a few more items of bad news on that front but the worst could be over.

Of course, if the central bankers and regulators could have found a way to make the banking industry more honest about its losses more quickly, we might have been spared the next stage of 'real' economic problems. Now we've got the stage where the banking crisis is passing but the banks haven't got enough cash and confidence to lend as much to the rest of us.

My prediction is that the stock market will start the drifting I was expecting a couple of weeks back - apologies for the plunge in prices in the meantime.

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Has William Burns going to Geneva to attend the talks with the Iranians signalled a backing down on the part of the Americans? Listening to the news this morning, it was interesting to hear Philip Bobbit saying that the meeting provided an opportunity to signal incentives for better relations at the same time as signalling that the Israelis are serious about stopping the Iranians getting a nuclear weapon capability.

It looks as if the Israelis and to a lesser extent the Americans are keen to do all that they can to try to drive a wedge between the the Iranians and their allies in Syria and Lebanon. So this wold suggest that there is going to be plenty of contact between the Israelis and the Americans and all their Middle Eastern adversaries. Will the Iranians be able to 'handle' their allies while all this secret contacting is going on or will they get out of step?

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I've not had much time for walking recently; too busy writing. however, I went on an old favourite route on Monday: Rodborough, Thursley and Bagmoor Commons. Thursley Common really looks as if it's recovering from the bad fire two years ago. This week there were press reports about the recovery of the wildlife, including the silver-studded blue butterfly.

This walk is just a bit too 'bushy' at this time of year; the views are better when the trees are bare. Unfortunately, there's one section just after Bagmoor Common that always seems to be waterlogged - except in high summer.

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I've realised that my posting rate has dropped off steeply this summer. It's down to the writing, which is going OK but the current book is proving just as hard work as the first one.

I'm exercised about Iran's nuclear threat, all of a sudden, and the possibility of the US and, more particularly, Israel taking military steps to thwart the Iranians' ambitions. Maybe on an emotional level my ideas are coloured by watching the last episode of Dr Who but until today I was inclined to see the recent headlines about Iran and Israel as no more than attention grabbing talk. What I read today suggests that it's only insufficient intelligence about the whereabouts of all of Iran's nuclear facilities that's holding the Israelis back.

Even more worrying in a sensem is talk of Israeli - Syrian negotiations over the Golan Heights. So far this looks like talks about talks with Turkey acting as broker but it could turn into a serious clearing of the decks on the part of the Israelis. Although the scale is far smaller and I'm not suggesting that the protagonists compare with Hitler and Stalin Israeli - Syrian talks, after so many years of bad blood - seem akin to the Nazi - Soviet pact of 1939.

If Israel did attack Iran, presumably the role of the United States would be to keep the oil flowing from the Persian Gulf by stopping the Iranians from closing the Straits of Hormuz. Would the Iranians themselves stop exporting oil? Can they afford to do that? Is this the real fear that stands behind the rise in oil prices this year?

My hunch is that, as much as anyone can have at this late stage, Gordon Brown has mastered the energy security brief. Hopefully, he's been preparing for the eventuality of an even more dire energy security situation. He needs to have done that because such an Israeli attack would probably lead to petrol rationing within days.

I'd expect the Israelis to be condemned for an attack like that but the logic of their need to remove Iran's nuclear threat is undeniable (if it exists). Also, it's easy to see that they would very much like President Ahmedinajed to fall from power. However, history seems to teach that short, sharp military actions with neat objectives rarely work out as expected. That's not to say that either the Americans or the Israelis are considering some kind of occupation. The US would rather see Iran undergoing strategic restraint (like Saddam Hussain after the first Gulf War). Nevertheless, there are plenty of tinder-box situations ready to go up in that part of the world.

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The stock markets has done worse in the last week than I expected but I still think it may have reached the bottom. Not that I'm expecting a very rapid improvement from here on. And I'm beginning to think that finance ministers, central bankers and financial commentators haven't really got a clue about the world economy picking up towards the end of 2009; they're just hoping that happens.

There was an interesting article in yesterday's Telegraph, saying that 'shorting' of some shares has reached such proportions that the hedgers are having to pay more to borrow the stock to short with AND that some institutions are refusing to lend the shares of some companies (because it's against the institutions' interests).

Depressing finance news items included a report on M&S carrying on with buying back its shares just days before the price tumbled after last week's trading statement. There have been reports that Texas Pacific was able to pull out of its B&B investment because the bankers left a material adverse change clause in the agreement by mistake. Part of the rationale of private equity is supposed to be speed with which it can react to situations; Texas Pacific certainly proved that point. But it looks as if it may be more a case of the speed with which private equity HAS to react to situations because their using other people's money. the economic outlook doesn't look good unless investors can become more robust and patient.

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I've read two good lightweight books recently; 'The Spanish Game' by Charles Cumming and 'Dance of Death' by Barbara Nadel, one of her series of police detective novels set in Istanbul (except this one takes place mainly in Cappadocia).

I went for one walk last week but it's one I've done a couple of times before. This week is going to be a particularly busy week so I don't expect to get another walk in.

I’m pausing after completing a chapter of the book I’m working on at present. There’s a choice filling in the 2007-8 tax return or posting or a variety of other activities. So I choose posting.

I’ll start by reporting on the recreational stuff today; I’m not feeling very in touch with the 2008 zeitgeist. The most enjoyable event since lasting posting was a trip over to East Sussex last Saturday to visit Bodiam Castle. A great place in a lovely situation but you need to have knee joints in good working order to cope with all the spiral staircases.

We came back along the coast with brief stops at Beachy Head – a relative had lost their passport and had been trying to get in touch most of the afternoon to see if I had any ideas about where it might be – Orange coverage in Eastbourne-Bexhill area is extremely poor – and Birling Gap. We also drove along the front at Brighton; this is the first time I’d seen the West Pier in its present state – disconnected from the beach, just a pile of old iron.

On Monday I took a walk mear Hambledon. This started from the bottom of Vann Hill (regular walking territory for me) but included a stretch on the aptly Breakneck Hill. The best thing about walking in this area is the ‘big’ views you have of the Weald and the South Downs. The woods on the flank of Breakneck Hill are ruined. Although the standing trees are full size, the trunks of fallen trees are everywhere. Presumably, it’s been like this since 1987 but because the hill is so steep no one has been able to thought it worthwhile to cut them up.

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Most of this post, including the following paragraph, was written yesterday but I didn’t get around to actually posting it. The business news yesterday evening and this morning was all about another lurch downwards on the stock markets which would have made my ‘down a bit but mainly sideways’ look a little untimely. But I think I’ll stick with that as my longer term view.

It looks as if the stock market is going to drift down a bit but mainly sideways for a few more months. I’m hoping that it will pick up from October onwards. For British banks to have such low share prices seems strange when you consider how unlikely it is that the government would allow any of them to get into serious trouble. Barclays, HBOS and Lloyds have dividend yields of 12%, 19% (!) and 12.75% respectively. But these days, what government want (such as lower oil prices), they don’t get.

If the high oil prices are mainly due to hedge fund speculation, things could get even more difficult if and when the oil prices fall. Exactly what the effect of all these bets on high oil prices going sour would be, no one seems to have worked out yet.

There’s been more about stock shorting in the press since I posted on this, specifically about hedge funds shorting UK bank stocks. It looks as if they short the shares, knowing that the banks will be turning to them for capital injections (because their capital ratios aren’t strong enough). They can then buy the shares in the bank for even less than the lower share price that has resulted from the shorting. It looks like a good line of business.

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There’s been a lot in the news about speculators being responsible for the rise in the price of oil. The US Congress in particular seems to be looking for someone to blame for problems the high oil prices are causing. In this case congressmen were blaming hedge funds (again) and oil companies. By a very small margin the balance of (expert) opinion seems to be that ‘real’ demand is the real cause of the surge in oil prices.

Incidentally, this seems to be Gordon Brown’s view on the matter and, whatever his other mistakes, he does seem to be persevering with getting energy policy right (oil supplies – nuclear - & renewable). There was a first anniversary comment in today’s FT that was slightly more upbeat than the current norm – you might say that the fashion is to ‘short’ Gordon. David Cameron is easy on the ears but I still haven’t heard any Conservative policies to get excited about.

I've been having a break from my normal Sunday read - The Observer - because it seems so predictable. Last week we bought the Sunday Times and this week the Sunday Telegraph, which was quite good - especially the coverage about Afghanistan and Zimbabwe.

It’s difficult to see where things are heading right now. Stories like David Davies by-election and the Lisbon Treaty (Treaty of Lisbon ?) just seem to trail off to nowhere in particular. However, the fact that voters in the Irish Republic were so concerned about their neutrality answers the question of the future of European integration as far as foreign policy is concerned. You can’t have a single foreign policy if some members are neutral and others are not. Nor will it work if the different member states are at odds about their willingness to put their armed forces into danger.

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Do supporters of Zimbabwe's MDC draw strength from Western leaders condemnation of President Mugabe or do they think it just makes them look like a colonialist fifth column?

I haven't yet heard anyone recommend 42 days detention without charge except on the radio. Like many I was dismayed that the government won its vote in the Commons especially as it seems certain that inducements were being offered to Labour and Democratic Unionist MPs that fell in with the idea.

How sincere the government is with its arguments that 42 days are necessary is difficult to say. Whatever their level of sincerity on the issue, it probably wasn't as high as their fear of being confounded again so soon after the 10p tax fiasco.

The danger now is that some completely unforeseen set of circumstances will conspire - in say another three years' time (or maybe 10 or 12 years down the road) - to bring about just the kind injustice that the opponents of 42 day detention fear and the government denies will ever happen.

As for David Davies bye-election, I'm not sure what to make of it. On the one hand, it seems to be harking back to Michael Heseltine's Mace wielding in the eighties. On the other, a lot of powerful people have gone out of their way to rubbish what he's doing so maybe he's got a point. Anyway, I hope there is more debate about British liberties and that these polls about 65 per cent of the people being in favour of 42 detention start to shift.

I guess the problem with David Davies's attempt to open up the debate about public safety and liberty is that the bye-election is going to happen months before the House of Lords get to debate (and throw out) the measure on 42 days.

The reason that I think David Davies's stand is the better one is that, with all the threats to living standards that the UK could face in the next couple of years, threats to personal liberty could come to seem even less important. The greater danger is the damage we could inflict on ourselves rather than the threats from outside extremists.

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The Irish referendum has provided some entertaining interviews with politicians denying that the Lisbon Treaty was dead in the water.

I think the politicians have got a point; the EU does need to become stronger but they haven't even begun to initiate a debate about how greater strength AND more democratic accountibility is achieved.

Obviously, with President Sarkozy and Chancellor Merkel saying that the EU member states should steam ahead with their ratifications, it's looking unlikely that we're going to get the debate yet. But Mr Brown could make a start by not allowing any more parliamentary time for debating the treaty until the situation has become clearer. Perhaps the time could be devoted to a debate about how the EU could advance properly.

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The Financial Services Authority's decision to force short sellers of shares to declare themselves if the company they're shorting is in the middle of a rights issue and they borrow 0.25% or more of the stock raises some interesting questions.

Exactly, how do the 'shorters' engineer the effect they are hoping for?

If so much of the stock is being borrowed for shorting, why don't the institutions who are lending it out - and who, presumably, will lose out if the shares drop in price, refuse to lend or charge more?

At some point there are going to be so many shorters needing to borrow to short that the stock will be in short supply for borrowing purposes. At the moment there seems to be a stock lending market that operates without anyone really knowing what the market price is. Is this what the FSA's new regulation is designed to make clearer?

personally, with those impressive dividends, I don't see why bank stocks are so unpopular at the moment. The possibility of shares that yield 10% in the middle of serious economic problems seems puzzling.

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This has been a busy writing week so it's been interesting and challenging. However, I took a couple of hours out on Friday afternoon for a walk. Although I've lived in the area for 10 years I'd never been for a walk on the western side of the Devil's Punchbowl. This is actually much better than the eastern rim. The view is better - you can see Leith Hill over the top of the far side of the 'Bowl' and you're so far away from the A3 that you can hardly hear the traffic. I'm beginning to think that the tunnel is worthwhile after all.

When you get to the top there are ponies and highland cattle grazing. Thankfully, they're all very placid.

Today's post will include something on the following:

1. 42 day detention
2. Northern Rock's nationalisation
3. Stock Market
4. Personal stuff

I've been having difficulty deciding what to make of the House of Commons vote on 42 days' detention. On the one hand I'd like Gordon Brown to be given a chance to get on with the task of navigating us all through the current choppy economic currents (and there does seem to be a clear sense that he needs to get 42 days if he's not to be fatally 'wounded'). On the other hand there doesn't seem to be a lot of proof being aired that 42 days is necessary (This was Philippe Sands argument in The Times on Thursday and it sounds as if Sir John Major was saying the same thing in the same paper on Friday). Some may say that the experience of six weeks' loss of freedom by a handful of innocent people does not seem so serious in comparison to the scores of lives that might be saved as a result. But you only have to imagine being detained for so long yourself (especially if you have vulnerable dependents) to realise that being incarcerated for so long could be a terrible experience. Also, those who might be detained and then not charged are most likely to be from the very groups that genuine terrorists are drawn from. Longer detention could create martyrs and be a fertile breeding ground for further terrorist recruits.

All in all the situation is reminiscent of the Commons vote on Iraq with the suggestion that those who know best should be trusted and the Parliamentary Labour Party following some special logic of its own that doesn't include being prepared to live with the consequences of what it votes for.

That said, the government's concessions to MPs concerns in everything except the length of time is a good sign. Government concessions to Parliament almost always are a good sign until complete paralysis sets in.

So I'm agains the detention legislation but not at all sure that I want the Prime Minister to lose his job over the issue. Indeed, the crowing about the PM's unpopularity seems badly misplaced. The whole country has a lot at stake in the country's (and the world's) economic managament over the next 18 months. Thinking on this subject yesterday, I wondered if the economic situation really was so dire but the news about oil prices and US unemployment figures convinced me that it was.

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Now that judicial review is being sort by the shareholders of Northern Rock about the terms of the nationalisation the government won't be making any concessions in this quarter (not willingly at any rate. What's puzzling about the whole story is that, while the commentators keep saying how exceptional the circumstances are, they and most of the parties involved speak as if there were clear precedents for them to be guided by.

As far as the government is concerned, with the likelihood that they will be able to sell the Rock as a going concern in about 2011, it does seem as if the shareholders should receive something. Otherwise, given the state of the government's finances, you can't help but wonder if the future privatisation of the bank atan enormous profit is seen as a clever wheeze to plug part of the deficit.

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The London stock market continues to bump along in the same range. This level performance is unusual for recent times. Given all the financial distress in other kinds of investment, staying level seems highly desirable. The question is what factors are keeping the market so calm. There seems to be an appreciation that a lot of stocks are undervalued when their earnings (and in some cases their dividends) are considered. However, that factor could attract both long term investors, who are prepared to wait monnths or years for an upturn, and speculators who will be hoping for (and possibly desperately needing) an improvement very quickly. Some time soon they are going to realise that they're not going to get it and sell up. If that's the case the stock market could take a significant dive sometime soon.

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It will be interesting to see if any direct action in the oil market arises from the meeting of the G8 plus China, India and South Korea in Japan this weekend. Might the western governments be hoping to persuade the Chinese to use some of their dollars to spoil the tactics of those who are speculating in oil futures?

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On a personal note, I've been for one walk. At Shackleford; it wasn't a great success because I was struck down with hay fever. That's what I called it anyway. When I got home I took some piriton to stop the sneezing but then I could hardly keep awake.

Yesterday, we went to the beach at East Wittering for a barbeque - but I forgot the barbeque bucket! I'm not having much success with this bucket; the first time I used it I burned a whole in the lawn at home. Anyway, I went to tesco to buy a disposable one and we had our barbeque though it took about 30 matches to get it alight.

I've taken delivery of two composters to replace the onetime compost heap behind the garden shed. The garden has just reached that point where a lot of the shrubs need urgent attention or they'll be too tall to manage.

On the work front, I've begun writing another book. The first one is due out in September (I believe).

I've been reading a book called 'God's Undertaker' by John Lennox. He's a mathematician and the book is a look at the scientific arguments in favour of (mono)theistic belief. Although it's written for lay people, it's fairly hard work but well worth the effort. It will be interesting to see if some of his arguments become aired more widely in the future; I hope they do. However, I was sorry that Lennox doesn't seem to credit the existence of parallel universes.

Another slightly longer interlude in between posts. Last week was relatively busy with trips to London and Northampton, followed by a more than relatively lazy bank holiday weekend.

Today’s post will be mainly about the UK as Prime Minister Brown seems to be in hotter water than anyone ever expected, even a short while ago. However, talk of looking for an alternative leader seems like a waste of breath (or newsprint). The media have latched on to Mr Brown’s nemesis and think the public will find the story entertaining – though in point of fact it’s not that riveting. If the Prime Minister is forced out, we still have a government that has lost its impetus (and popularity) but with two more years to go before there has to be an election. So the country faces two years of marking time in politics (like the mid-nineties). No Labour politician comes to mind who will be able to re-invigorate the government any better than Gordon Brown can. Two years of batting his way through the country’s economic and fiscal problems probably won’t bring victory for Labour in 2010 but at least the country might just be in better shape than it is at the moment.

As for a cabinet reshuffle; possibly. Wasn’t the Prime Minister going to resurrect cabinet government last summer? So far the only thing we can be sure that they’re discussing is the crisis in the government’s popularity. They look so scared that fear is blocking the flow of ideas.

For the last few weeks the government’s unpopularity has been (partly) obscuring the economic problems that are its principal cause. The media’s take on the credit crunch now seems to be wallowing in all problems it’s causing people. This is not very profound and it would help if commentators could start talking more about solutions. Even big business looks as if it is just hoping for the best. Clearly, there is more to the surge in oil prices than hedge funds deciding to speculate in oil futures but the large sums of money stampeding into commodities suggests that longer term investments are losing out (among them oil exploration and oil refineries). With oil in short supply, acquiring oil exploration companies would seem like a canny investment but the important investors seem to be indicating that it’s too long term for the time being.

As for the rumours that the government might respond to increase in oil prices by delaying the increase in fuel duty and reconsidering its plan to increase road tax on older cars that aren’t fuel efficient; the government is well past the point of absurdity. Green taxes don’t seem logical in any case but surely anybody can see that taxes designed to modify spending patterns need to be introduced before people have committed themselves financially. Furthermore, while the government may be able to reverse its tax policies, this is doesn’t necessarily return the situation to the status quo as far as the poor taxpayer is concerned. At the very least the government has lost any sense of rhythm and consistency in its policies; if it doesn’t improve its performance soon there is going to be a massive breakdown in trust such as we haven’t seen since the reigns of Charles 1 or George III.

It all comes down to creating a dialogue between the politicians and the public. In the present situation it’s difficult to see what dialogue can be started. Law and order is too intractable a problem for any government probably, the government has blown its credentials for talking about fairness by the 10p tax rate fiasco and too much leniency towards ‘non-doms’. The areas I’d concentrate on (apart from basis economic and fiscal competence) would be foreign affairs – making links with the larger members of the EU stronger so the Russians can’t bully us and their smaller neighbours about energy and other matters – and energy conservation – particularly better and cheaper public transport and more effort on making all our old houses conserve heat more effectively. I'm not sure what's for the best in either of these areas but they do at least merit some kind of public debate with some hope of a practicable policy arising out of it.

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Today, I’ve been for a walk even though it’s been raining most of the day. This was a walk from Witley Common, around Rutton Hill and back via Bowlhead Green. It was very wet and the water coming off the trees was worse than the rain falling out of the sky. Everywhere was lovely and green. The rain seems to muffle the sound of traffic but during the middle section of the walk I could hear clanging, which I took to be work on the new tunnel at Hindhead.

On Saturday - the only sunny day of the weekend - we took a rowing boat out on the River Wey for an hour. Very enjoyable.

A longer than usual gap since last posting. This is partly due to be busier (various things) but partly because I didn't really feel inspired to the share the thoughts that had come to mind.

Most of the items in the news that gave pause for thought were domestic UK ones. The disasters in Burma and China have made a deep impression but they challenge the desire to find meanings too seriously to provoke any comment. The one 'meaning' that seems abundantly clear is that of the lack of effective action by the military junta in Burma - we have other priorities that are more important for us than the lives of our people.

Incidentally, I hadn't heard any explanation as to why the media have stopped referring to 'Myanmar' - according to Wikipaedia, although 'Myanmar' is the correct name for the country in the Burmese language, it lacks legitimacy because it was imposed by the junta and opposition groups continue to use 'Burma', which is the colloquial name.

It seemed dubious that Burma and China should be knocked out of their top spots by the government's tax policy or Mervyn King's reading of the economy.

Commentators' handling of the increase in tax allowances was curious. They homed in on the end of the crisis over the abolition of the 10p tax rate and the start of another storm over government borrowing but didn't make the obvious point that an increase in everyone's tax allowances will be nice - thank you very much. On yesterday's 'Today Programme' Gordon Brown compared the tax allowance announcement to the economic stimulation packages in Spain and the US (though it's much smaller). This wasn't very convincing. The government hasn't yet tried to make much capital out of its gift to the taxpayers. Presumably, it's hoping to make this into more of a good story by the time of the next general election.

The alternative is that some way has to be found of clawing the money back from us because of a crisis in government finances a short way down the road. The next 12 months are going to be nerve-racking time for Treasury Ministers.

Frank Field's apology to the Prime Minister in the HOuse of Commons can be taken as an indication of just how frightened the Labour Parliamentary Party are. At least a 'peace within the castle' policy demonstrates an instinct for survival.

Of course the abolition of the 10p tax rate was wrong-headed but it took nearly all of us an awfully long to reach that conclusion. So where did the government's crisis getup such a head of steam? Gordon Brown can never have wanted it to happen this way but the government's accountability to Parliament has improved no end. The government has been made to look stupid but its parliamentary party looks much more principled and effective than it normally does. How would that play out in an election?

Gordon Brown's other humiliations have jostled for our attention in the last week. The run of political biographies have managed to partially eclipse the matter of the referendum on Scottish independence. As the memoirs will be forgotten by Christmas while a referendum on Scottish independence could reverberate for the rest of the century, this lack of proportion is unfortunate.

Of course, the Labour Party stand to lose far more from Scottish Independence than any of the other parties but their worries about their own interests seems to be blinding them to the true dimensions of the whole issue.

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I don't think the fine imposed on ITV was really big enough but hopefully a low point in cynicism has been reached - and passed. The decision to ignore the votes phoned in by the viewers only goes to show how trivial the programmes' producers thought the programmes were in the first place. It'll be interesting to look back and see if viewing tastes change after this.

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On the personal level we've had one great outing to the beach, I've heard a cuckoo (at Puttenham Common) and I'm in the process of demolishing the compost heap, in order to make space for a composter. Work has paused now but it looks like there are some interesting opportunities coming up.

Not sure about the contents of this post as I start but it will include the following at least:

1. The sad state of the Labour Party
2. The economy
3. More on Afghanistan
4. Personal news

Having voted Labour only a few times in the last 30 years, I can’t say I’m devastated by their current travails. This 10p tax band affair seems to have been an accident waiting to happen. Credit should be given to Gordon Brown for turning out for a ‘Today Programme’ interview at a time like this. It seemed that Tony Blair disappeared off the airwaves for a good part of his premiership.

However, the credit is awarded for courage and perseverance rather than astuteness. Despite the makeover in Gordon Brown’s appearance in the last couple of years, he still doesn’t seem to have mastered the communications angle. Whenever he’s annoyed or defensive, he starts hitting us all over the head with facts. The facts are not interesting, they’re nearly all shorthand for statistics and they mainly have to do with the government’s achievements over the last 11 years. Folk are not generally going to be interested in facts like these; they want to be talked to about what they feel. Even if the Prime Minister is talking about something that affects you personally, it goes over your head. Every time he seems to forget how preoccupied most people are about their own fairly immediate future. Talk about achievements just doesn’t hit the right note and it keeps reminding people how long the Labour government have been around.

The commentators are always saying what a masterful politician Gordon Brown is but he seems to be good at scheming and alliance building (like a Thomas Cromwell or Lord Burghley). That’s not necessarily bad but the connecting skills needed for a democratic leader are missing. Until he’s better at communicating, he could do with saying less for a while. When he starts making speeches again, he should concentrate on what the country is doing and what that means instead of going on about what the government has seen fit to do FOR us. And if he can’t see that the whole country is doing anything, he needs come up with some ideas.

Although, it now seems that Mr Brown was profligate with the nation’s finances in the second half of his chancellorship, he does have some of the credentials for a safe pair of hands in these worrying times. He’s got the contacts with the big banks, central banks and regulatory authorities, he knows what good housekeeping means (he can stand up to special interests), he has an instinct for helping people. If government was just a committee that needed to get things done, he’s the obvious choice to be chairman. The danger is, that after Thursday’s bleak election results, the Labour Party are going to be too concerned about saving their own skins in 2010 to be able to play their part in solving the gathering economic crisis.

So rise above that, please, Mr Brown.

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I’ve been trying to fathom just how serious the credit crisis is for mortgage borrowers. As someone who’s been on a very expensive variable rate mortgage for the last 22 years, I hadn’t got to grips with what happened when fixed rate mortgages came to the end of their term. To believe some of the press you would think that all the banks and building societies simply asked for their money back when a fixed rate mortgage came to an end. The fact is that they can (and will) always switch you into a variable rate mortgage when this happens. The trouble with this is that the variable rates are nearly all in the region of 6.5% or higher.

The second thing I’m having difficulty understanding is what the powers that be want to happen. It looks as if the government is getting really worried about mortgage affordability; Alistair Darling called the chiefs of the high street banks in a couple of weeks ago to talk about lending. Yet, the Bank of England seems to be a lot less keen on easy terms for householders. The bonds for mortgage backed securities deal with the banks was designed to free up inter bank lending rather than help out the house market. Now, it looks as if the government will have to get the banks to try harder to help home owners, otherwise the economy could seize up. If the commercial banks prove to be really obstinate about lending (because they’re so scared of a liquidity problem), the government could always reverse its decision to shrink the Northern Rock and decide to make it grow instead. The other banks wouldn’t like it but a lot of people would.

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I’ve finally reached the end of Sarah Chayes’s ‘The Punishment of Virtue’. Her distinct, personal style of writing won me over eventually. Basically, the book boils down to an accusation that the ISI, Pakistan’s intelligence service, has been meddling most successfully in Afghanistan’s affairs ever since the allied invasion and has completely duped the US military. The means that the ISI has been managing the Taliban to do all their mischief making by proxy. In view of all the rumours and accusations about relations with the Taliban (the expulsion of Marvin Patterson and Michael Semple and the more recent order from President Karzai for allied troops to stop arresting Taliban), this seems very likely.

Sarah Chayes makes the distinction between her interpretation of events and the view that chaos prevails in Afghanistan because the Taliban are anarchists and, because the people like anarchy, remain a potent threat to the allies. She makes the valid point that, in fact, the people are traumatised by so many years of conflict and have lost their courage. However, the fact remains that the North West Frontier has been anarchic for centuries before Pakistan came into existence. The Pashtuns living on either side of the Afghan-Pakistani area may collectively be exercising leverage on the workings of the ISI (and the Pakistani state as a whole) as well as sometimes being the puppets of the spooks.

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On a personal note, it’s been a busy week with work and a wasted trip to London for a meeting. This was a ‘Waiting for Godot’ experience for me. I waited for 90 minutes in a Covent Garden restaurant; they were very nice, they even bought the evening paper in for me to read. I guess that waiting around for someone else who inexplicably doesn’t turn up sums up the fathomlessness of life. The misunderstanding has now been cleared up and the meeting is due to be rescheduled.

No walks this week but I’ve been out in the garden a lot. I’m switching over to summer living with breakfast outside, lots of grass cutting etc. etc.

We’ve been bothered by an alarm going off repeatedly across the road from us. We contacted the owners and yesterday, after two occurrences in the night, we rang the caretaker. They didn’t know that the alarm had gone off. This leaves us wondering what the alarm is there for. The ‘contractor’ is going to be called in (again) to work out what’s going wrong. The noise carries on for about 25 minutes and doesn’t allow you to think about anything else once you pick up the frequency. As it’s unlikely that the contractor will agree to spend a night locked in these premises, I’m not sure how they are going to work out what’s going wrong. I thought it must be set off by passing foxes or cats but the caretaker said it had to be something inside the building – a big rat?

Thank you for reading and have a good bank holiday.

Today's post will return to the subject of Iraq for the first time for a few months as well as covering a things closer to home.

What's happened in Basra this month has been difficult to make sense of. The coverage in the press and on the radio has been meagre compared to all that's been written and said about Iraq in the last five years.

Basically, the Iraqi Army's moves against the Mahdi Army seem to have been more successful than most of the commentators expected or hoped. Yet this seems to be good news that no one much wants to talk about. There are a number of convincing reasons for this but it doesn't augur well. In the US public debate has moved on from Iraq to the credit crisis and, generally, there seems to be an understanding between the presidential candidates that domestic issues should take precedence over foreign policy ones.

In the UK the problem of engaging with the news from Basra is more specific; the Iraqi Army (with American help) seems to be succeeding where the British Army failed for three or four years. This is an oversimplification; the British weren't present in Basra in large enough numbers to achieve the results we've seen in the last few weeks. Since the British withdrew to the Basra airbase (last September?) a number of factors have changed to the advantage of Prime Minister Al Maliki. Firstly, the US surge successes further north, though not unqualified, no longer seem like a flash in the pan, secondly, the condition of the Iraqi Army has had time to make further improvement, and thirdly, possibly,Mr Al Maliki has been able to make some headway in persuading the Iranians to stop interfering in the Basra region (more of that later).

The MoD website has some robust contradictions to views rumours that the Iraqi Army has been weakened by mass desertions and to suggestions that the success of the Iraqi Army (and their American advisers is a humiliation for the British forces.It points out that the Americans weren't specifically invited to go along to Basra but were already attached to Iraqi units when they were based in other parts of the country.

The important point is that the Prime Minister (with the Americana) has been using his time better than people gave him credit for. But western politicians need to carry on talking about Iraq even if they suspect that their voters don't want to hear right now. Otherwise there's a danger that, in dire straits themselves, and with a public that's forgotten about Iraq, they'll be tempted to sell Mr Al Maliki down the river a couple of years hence. In any case, Iraq is strategic and could swing back into the limelight very quickly.

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The New York Times supplement to today's Observer include an analysis of Iran's policy towards Iraq by James Glanz and Alissa Rubin which said that, as far as Basra is concerned, they favour the Supreme Islamic Council of Iraq (which backs Mr AL Maliki)over Moqtada al Sadr because the Council back greater autonomy for the Basra region. However, the article notes, the Iranians are opposed to actions against Moqtada al Sadr and the Madhi Army in Baghdad. It looks as if the Iranians hope for an Iraq with a weak central government rather than believing that they can exercise long-term control over the entire country.

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I've been for one walk since last posting. This covered mainly new ground for me. I started by walking from Holdfast Lane westwards towards Haslemere town centre. I crossed main road and followed a lane and a bridlway behind the Lythe Hill Hotel. All this first section of walk - except the lane - was very muddy. The ground is completely saturated. I had intended to take a look at a waterfall marked on the OS map but the mud deterred me. The best part of the walk was once I was out from under the trees and walking past High Barn Farm. A little further on you get a superb view of all the (Surrey) hills to the north and north east. The way back takes you across a gallop and back to the main road (the Petworth Road if you live in Haslemere). I crossed over and went back to my starting point by way of Furnace Place.

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I'm currently working on two different projects, which is making me busy so I don't expect to take any longish walks for a week or so.

I had been planning to post slightly earlier than today but just found it hard to get my thoughts into shape.

I wanted to write about the credit crunch but the nub of the subject seemed to keep on eluding me. What’s obvious is the comparison between what’s happening now and the months after the Wall Street crash of 1929 which were characterised by reassuring assessments of what was happening by leading figures of the time but a singular failure to get to grips with that crisis so as to bring forward solutions.

Commentators are still staying that the credit crunch is not going to be as great as the slump in the 1930s and that still seems believable. However, that still leaves the world in a pretty fragile state; not a good time for further shocks.

In the UK there have been unfavourable comparisons between the inactivity of the Chancellor of the Exchequer and the Bank of England and the decisiveness of the Federal Reserve in the US right back in September. I seem to have heard comments to this effect at least twice in the last 10 days. It’s unfair in as much as the government and the regulators have to keep an eye on public perceptions and talk of emergency measures in September – when Northern Rock’s problems first hit the headlines – would have scared us all. No, September 2007 was a different age.

Whatever the Bank of England/the government should have done in the last few months, the swap of government bonds for mortgage debt looks pretty certain and the commentators seem to be agreed that the much reported RBS rights issue stems from the government’s insistence that banks increase their capital to loans ratio and that this insistence is the price the banks will have to pay for government help. This in turn heralds a shift in the balance of power between government and high finance. Ultimately, the former have always had more trump cards than the banks; it’s just that this fact has been disguised for the last quarter of a century. The adjustment to the balance of power is probably here to stay for a number of years and this has implications for government and citizens and all kinds of social relationships over the next 20 years or so.

Of course, if the banks were to go on a lending strike for an extended period, the government now has its own nationalised retail bank to do more of the work of mortgage lending.

As far as the UK government is concerned, it looks as if more and greater unpopularity can be counted on. However, the present government do have plenty of financial expertise. Indeed, it’s not at all clear what they would have done if the next couple of years had been ones of continued strong growth and greater prosperity. It would have been more public expenditure and not a lot to show for it. Whether the current government can survive the 2010 (?) election is less clear.

Loss of potency vis a vis government is only one of the humiliations for the banking industry. It’s going to be accompanied by a massive loss of mystique in the eyes of the general public. The media are already getting to work on this. Before long the press will be recalling the birthday parties of private equity partners as if they pages out of ‘The Great Gatsby’; there will be plenty along the lines of how the mighty are fallen. More seriously – and positively – there should be more media space to help the intelligent layman, firstly in the world of finance and then in other spheres as well. This is going to mean more people understanding more about what bankers are up to and (in theory) that should keep them in check more.

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On a personal note, I’m expecting another batch of freelance work to arrive shortly. I’ve not had a good walk since getting back from Australia but on Monday (my birthday) we had a great day out on the Isle of Wight, visiting Newtown and Brighstone Bay and finishing up with fish and chips on the promenade at Sandown. The island’s website has a restaurant section that reckons to tell you all you need to know ‘from’ fish and chip shops to haute cuisine but in fact fish and chip shops are relatively few and far between. We wondered if some areas might be served by a van. Anyway, Sandown is the place to go; the high street had three in a row (like banks in ordinary towns) and may have others I didn’t spot.

I have fond memories of Sandown as the destination of the school choir outing (in 1970 and 1972, if my memory serves). The alternate years we went to Bournemouth but I liked Sandown best.

I’ve nearly finished reading Stella Rimington’s autobiography and now feel a lot more informed about the relationship between the government and the intelligence service. Stella Rimington is good defending ‘her’ service but I now have questions about the possibility of politicians being implicated in other under cover activities (involving other secret services possibly). Also, it would be interesting to know more about how M16 goes about ensuring that the armed forces wind their battles (and occupations).

I’m also reading Robert Harris’s ‘Ghost’ and enjoying it a lot.