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Look out for the "slump hunks"
The decision of the European Central Bank to raise interest rates a quarter percent back in July has been described as potentially one of the worst decisions of the post-war era. The ECB along with the Bank of England, the US Federal Reserve and several other world banks have since tried to rectify matters with a 0.5 percent cut today, though the impact of this global decision remains to be seen.
As far as the British are concerned, however, the decision of PM Gordon Brown and Chancellor of the Exchequer Alastair Darling to respond to Nicolas Sarkozy's summons rather than remain in the UK and batter out a plan to save UK banks could have more impact.
For as the British duo posed worthily with their European colleagues, our continental friends were plotting "every man for himself" reactions which made a mockery of their show of unity; furthermore, back in Blighty, the absence of Britain's top two laid fertile soil for rumour.
Shares in the UK's top companies plunged on Tuesday, led by crashing banking shares. The Daily Mail followed Guido in pointing the finger at BBC business editor Robert Peston, who filed reports, supposedly with the authority of his Downing Street connections, claiming that three British banks had asked the government for cash injections.
Bank shares tumbled, taking the FTSE with them, as confidence in the banks fell. Others realised that government control of three large UK banks would see shareholders' dividends slashed and dumped their stocks in a hurry.
Guido received numerous emails from City workers infuriated by Peston's reports and has since revealed an innovative plan to stablise UK markets.
It's an illustration of the dangers of what EURSOC described last week as hacks reporting from Mahogany Ridge. 24 hour news cycles, newspaper blogs, public confusion and business journalists in the front line for the first time in years have led to some, like Peston, jostling for position as "slump hunks" like their "scud stud" colleagues in the Gulf.
But one can't blame our slump hunk for everything. Gordon Brown, in following Sarko's summons, showed some of Tony Blair's old weakness for being at Europe's top table. Blair could never resist strutting with the big boys - Jacques Chirac and Gerhard Schröder - even as the Franco-German couple schemed behind his back. Now Brown fell for the invitation to give the appearance of unified concern, along with the premiers of Italy, France and Germany. Spain was reportedly furious to be left out of this get-together, but smaller nations, including Denmark, went their own way all the same by protecting all bank deposits.
Some newspaper commentators claim that this could be Gordon Brown's moment. Talk of inflation, interest rates and high finance are his thing, and their sudden glamour could give him the opportunity to tout his expertise. The Labour leadership issue has been killed off too. Does anyone fall for this? Brown's high seriousness on matters economic impressed voters a few years ago, but as we head for the worst recession in recent memory, with all economic indicators flashing red lights, is the public seriously expected to believe that the man who claimed to have abolished "Boom to Bust" is likely to dig us out of this hole?
Apparently, the slump in Labour's poll standings has ended, and the Conservative lead has narrowed ever so slightly. But does the young team led by David Cameron inspire any confidence either? Cameron's Tories, with their cuddly Blairite policies, are basically a good-time party. Fine for making us feel good about ourselves by buying organic food, but lacking the stern stuff, experience and clear vision needed to lead the country out of a recession.
Does that mean we're stuck with Broon? Few would bet on his chances of winning the next election. It looks like next year will be bleak in Britain and elsewhere. If Brown cheats the gods and steers an unlikely course through the economic storm, getting Britain out relatively lightly, he would feel cheated by an ungrateful public's rejection. However, as is more likely, the storm clouds will have parted somewhat by 2010 and people will be eager for the feel-good message of Cameron's Tories.
