"England has not defaulted since the Middle Ages"

While the eyes of the world were on Washington DC, the eyes of Laban and quite a few others were watching the pound lose nearly 5 cents in a day, and the bank shares continuing to slide.

Gordon Brown really is an economic genius. With hindsight his abandonment of the competition laws to save HBOS ("too big to fail"), by steering it into the grateful embrace of Lloyds, creating "much much too big to fail", seems more like the advice of a man who comes across someone sinking into a quagmire, and recommends to a naive passer-by that they should reach out and save him.

"There'll be a handsome reward for you, Sir Victor - he's a very rich man !"

Sir Victor thinks of the reward, steps up, stretches out his hand and pulls lustily. But the weight ! The man is too heavy ! He pulls his hardest but with horror he finds his feet slipping inch by inch towards the swamp ... he wants to let go, but the sinking man has his hand clasped in the iron grip of fear, and feels himself being dragged inexorably towards the quicksand ... it's giving way under his feet, and the man, still clinging, pulling, is sinking down ... down ... the Lloyds 'rescue' is going to be the death of the rescuer.

“Some people are saying that we are nothing more than a big hedge fund, not entirely unlike Iceland, and that national bankruptcy is a real possibility,” noted the man from ITN. “Whatever else this represents, surely it is total failure of bank regulation?”

Gordon, so angry that his eye-bags were packing up and leaving without a backwards glance, noted sharply that American sub-prime was to blame. “I utterly dispute what you are saying. I would urge you to be cautious in the remarks that you make."

Some interpreted this as a threat to the journalist - a foolish idea. Gordon is instead becoming distinctly aware that the markets are looking for the next falling domino. Spain and Ireland were the front-runners, but the UK is coming up on the rails in fine style.

“I would urge you to sell any sterling you might have,” Mr Rogers advised his army of investment followers. “It's finished. I hate to say it, but I would not put any money in the UK.”

The collapse of the RBS share price reveals another puzzle :

Taxpayers put £5bn into RBS in the form of preference shares in October. The bank now has a market capitalisation of £13.7bn (as of Friday night).

The government is tomorrow expected to swap the preference shares for equity. We - the public - will end up with another 10 per cent of the bank, ie up from 58 per cent to 68 per cent.

So we seem to be exchanging £5bn of pref shares for £1.4bn of equity.

That was £1.4 bn with a share price of around 36p - it's now a third of that. Is this fraud or incompetence ? Just Gordonomics I guess. He really does seem to be moving non-existent divisions around the map.


My new favourite hell-in-a-handcart merchant, Ambrose Evans Pritchard, thinks it looks bad. He thinks that in every article I read, mind - but he's been right so far.

What have our leaders wrought? The reckless conduct of City, the fiscal incontinence of Gordon Brown (3pc deficit at the top of the cycle), and the pitiful regulation of the UK housing boom have all combined to bring the country to the brink of disaster.

England has not defaulted since the Middle Ages. There is a real risk it may do so now ...

The Baby Boomers have had their moment in power. The most spoilt generation in history has handled affairs with its characteristic hedonism. The results are coming in.

Well ? Dollars ? Yen ? Euros ? Property ? Swiss Francs ? Tell me, someone - before exchange controls are reintroduced !