If you want to know what is going on in the world economy at the moment we recommend one source of analysis above all others: John Redwood's blog.
On a daily basis Mr Redwood is dispensing wisdom of the highest quality. Here's a selection of his posts from the last few days:
Saturday 15th March: "Listening to the deafening silence of the Chancellor this week, I was left asking myself “Doesn’t he know there is a credit crunch?”. Yes, he said he understood there were storms in the world economy, but then he raised a children’s umbrella and plodded on. He should show some urgency in tackling the overspending and overborrowing in the UK public sector. He should produce a statement on how the Bank of England’s powers in money markets will be urgently restored, learning the hard lessons of the combined failure to avert the Northern Rock crisis last summer. Behind the scenes, instead of playing silly politics with drink and green issues, he should be devoting his sole attention to international collaboration, to make sure the world authorities get ahead and remain ahead of the pack of bears seeking to make money out of bringing down other financial institutions and financial products."
Monday 17th March: "A quick haggle, a visit to the lawyers, and a bank is bought and rescued over a week-end in New York. That’s the way to do it. It makes the UK’s attempted private sector rescue of Northern Rock look ham fisted, long winded and ultimately unsuccessful in comparison. The US authorities have once again acted decisively, with vigour and purpose, to prevent the banking collapse getting out of control. This week we can expect further interest rate cuts in the US following on the 25pt reduction in the discount rate announced overnight."
Tuesday 18th March: "Outside the cocoon of the Commons chamber fear continued to spook the markets. Large sums of money were made available to the banks to ease them through the persistent credit crunch and liquidity crisis. The US were tidying up the loose ends of the rescue of America’s fifth largest investment bank. The dollar and the pound were in freefall, bank shares crashed, and the Chinese market fell as the authorities there threatened higher interest rates to combat inflation. Inside Parliament the government had decided the whole day could be given over to debating climate change again. We have recently had a full day on this topic as part of the so called EU scrutiny, and will have a second reading soon of the government’s Climate Change Bill. Surely that would be the appropriate time and place to discuss green taxes and regulations, not the budget day debate that coincides with such gripping and worrying events in financial markets?"
Also yesterday: "The second big problem that the Bank of England has is that prior to 1997, it was the day-by-day banking supervisor of all commercial banks, particularly the main credit-creating clearing banks that run our system. The Bank could see all of that business, and knew about it day by day, hour by hour and minute by minute. It had a close relationship with those banks—the famous Governor’s eyebrows would rise wisely or angrily if anything went wrong. The Bank knew whether they were liquid enough, whether they had squared their positions early enough in the day and whether they were taking a sensible position in the markets, so the banking system worked well. That responsibility was lifted from the Bank and given to the Financial Services Authority, and is now handled through a tripartite arrangement with the Chancellor and the Bank of England."