So, I was having a drink with a friend in the Royal Oak last night. And I casually asked if he’d heard about the government's rescue plan. The part-nationalisation of the entire banking system is just something you chat about over pints, nowadays.
The scale and pace of change in the banking system, the ongoing climate change/peak oil crisis, combined with the Beijing Olympics, the US election, and Russian naval antics, is making it feel like the summer of 1990 - when you can grasp that world order is fluid. Change doesn't happen because of one event (Northern Rock), or because of the policies of one government in one country. This has been brewing for some time.
A few things to note:
- How much is the BBC's Robert Peston contributing to the crisis?
- UK manufacturing has contracted for six straight months.
- Standard & Poor's is warning that Pakistan (the rupee is hitting record lows against the dollar) is close to bankruptcy.
- Terry Smith, chief executive of money brokers Tullett Prebon, told the Today Programme that the government's deal will "move the battleground ... to test the credit worthiness of the guarantors, the government." The £250 billion for inter-bank lending "is likely to be added to the government's liabilities and go straight on the national debt." Already, before this plan, with public sector pensions, PFI debt, nuclear decommissioning, Network Rail and Northern Rock, government liabilities added up to £1 898 billion (129% of GDP).
- European finance ministers have pretty much agreed to suspend the eurozone's Stability and Growth Pact restrictions on budget deficits.
Finally, Time has a report on the Chinese reaction to the whole sha-bang.