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.

=======================================================================

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.