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There's been a bonfire of the vanities since the Wall Street meltdown. Major names in banking gone; a whole ideology up in smoke. But could this be the start of a broader American decline? That was the bar-stool talking point when the world's leaders came to New York for the UN General Assembly, and it will be the subject of a discussion here on Newsnight tonight, towards the end of the programme.

Here's my take - and feel free to hit the comments button (my bosses have come over all "American Network" and told me to do an "essay" like real US anchorpeople get to do - I have not managed to get any big hair though. Here goes...)

At the start of this decade it looked like America had unchallengable military power, the economic dynamism to pay for it, and a highly exportable freemarket ideology...after just two weeks, much of this is in doubt. Washington's inability to solve its banking crisis has already harmed the USA's standing in the world. The German finance minister Peer Steinbrueck last week said US financial supremacy is over; today various EU politicians have come in for "afters" on this theme...

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It was not only Republicans who killed the TARP Bill on the floor of the house; it was Democrats too. But forget them. It was the American people whose voice was heard. It was evidence of a deep plebeian radicalism among the political heartland of the Palin-ite right and the Obama-ite left: about the only thing these two demographic groups have in common.

I got an email from Michael Moore this morning denouncing the TARP; and almost everybody who's appeared in vision on agency footage protesting the TARP has been recogniseably left wing. However the real revulsion is coming from small-town, free-market, and above all fiscally conservative America. I will elaborate: it's not just bailing out the failed fat cats that riles the Republican mass base, but the idea that it puts balanced books and the small state on hold for something between a presidential term and a generation.

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The Bradford & Bingley nationalization will see the bank's bad loans separated from its profitable core operations swifter than, well swifter than a child and it's "daemon" in Phillip Pullman's "Golden Compass".

It's a valid analogy too, I think. What the Treasury and FSA are doing right now is to separate off the remaining workforce and depositors from the mortgage debt, so that the former can go on living safer but less exciting lives while the poor old £50bn daemon of bad debt goes spiraling off into the aether hollering "help!" I won't labour the point by evoking the image of Yvette Cooper as , or Alistair Darling as a , but it does lead us into a parallel world wherein elements that look familiar are re-arranged into a surreal narrative. And here's where it goes next...

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One of the great things about investment banking is that even while a bank like Merrill Lynch goes down the tubes and gets taken over, its economics team steadily churns out research about the process as if it were happening to somebody else. It's a bit like when the Â鶹ԼÅÄ had to report on its own self-destruction after the Hutton Report. It can be done, and a paper from Merrill's economics team today makes fascinating reading. It's a summary of a much bigger , which surveys 124 historic banking crises. It's so good I am simply going to quote from it so that, if anybody in the White House cabinet room happens to be reading this, they too can quote bits of it as they get on bended knee to each other to plead for signatures on the TARP Act....

"An inconvenient truth: Net fiscal costs from banking crises are substantial, averaging 13.3% of GDP. The government is highly unlikely to make a profit on any program; the average recovery rate is just 18% of gross fiscal costs. Real GDP losses average 20% relative to trend during the first four years of the crisis. There is a negative correlation between output losses and fiscal costs: the higher the fiscal costs, the smaller the loss of output."

Translation: Dear Mr Obama, forget your plans for healthcare. Dear Mr McCain, who is gonna pay for more surges? Dear Mr & Mrs Joe Public of America - expect 4 years where you feel 80% as wealthy as you do now...

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I've been in Northern Ireland all day, speaking to small and medium-sized businesses about the impact of the credit crunch. It's incredibly mixed: there are some sectors that are just not going to be directly exposed - such as, if they are managing right, anybody whose main client is the public sector. Also the defence cluster and the globally-focused materials handling cluster seems to be surviving well.

But today was also the day Seagate hit the news with hundreds of job losses from its assembly plant. And I also heart some horror stories about what's small firms in the services sector, construction and the like, as a result of the credit crunch.

A bank manager described to me, generically and with no names, the way many firms' cashflow situation is worsening; how their access to even short term overdraft extensions is now curtailed and that, basically, there is - as HBOS found out - queue for credit and you don't want to be the last in that queue. The number of firms with unpaid invoices over 60 days is rising fast; so are overdrafts; you are also seeing credit insurance rising in cost.

I stress this is not yet the norm, but what everybody with a story to tell confirms is that it all started in June. This is the worrying thing...

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Okay I am going to try to address the question of "" prices for America's bad mortgage debt, on which the world-saving revolves.

The principle behind it is painful but laudable: to reward the banks for their reckless risk taking in order to avoid crashing the real economy, by spending $700bn on financial junk. The issue is can it work? I've been gaming it out in my head and this is how far I have got.

First let's define the dilemma: there is a large amount of bad debt in the system - let's say $2 trillion dollars' worth ( estimate on Newsnight 16 Sept 2008).

If they had to sell a portion of that debt now? Well suppose Bank A says, I've got $2m of bad mortgages I want to get rid of, what will Bank Z pay? Right now Bank Z has no money. It has switched its cellphone to "reject all calls" and is watching a DVD box set of The Wire with a case of Sierra Nevada in its luxury loft apartment with the blinds drawn. Banks B to Y likewise. Nobody is buying....

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Instead of pontificating this morning on the banking meltdown I am in a mood to ask questions to see if Idle Scrawl's growing band of contributors have any answers.

1. Have we mistaken an essentially US financial crisis for a global one? Given the USA is the financial centre of the universe and the ultimate source of consumption for Chinese goods, Middle East oil etc, you can overdo this - but have any European banks gone bust? Even HBOS, the emerging thesis is, was so badly run (and the UK stock market so laxly regulated) that the shorting attack on it was bound to sink it - so it's an "outlier". Or to re-pose the question, having failed to convince myself: is this primarily a crisis of the Anglo-US banking system?

2. Taking for granted this is a , shouldn't we stop talking about the "collapse of capitalism"? What is collapsing is a set of ideas, which to most people seemed perfectly rational: that deregulation and information technology, combined with more intelligent economic policymaking had created an unbustable boom. This, incidentally is the source of Gordon Brown's famous claim. As pointed out - and he's the only man simultaneously popular with hedgefund managers and anti-capitalists - financial crises are part of capitalism and indeed part of the business cycle.

3. What can come out of the "first crisis of globalisation"? To invoke another economist who crosses political boundaries, , is this merely the first crisis of a long-wave of economic growth that began in 1989 and should continue out to 2040? If so it is not the "end" of the globalised economy but the end of the beginning. If we interpret Kondratieff's long-wave theory as an insight rather than a dogma, we can discern that once the first spurt of enthusiasm for a new kind of economy is over, a new way of regulating it emerges. Isn't that what we are at the very beginnings of with Paulson, Chris Dodd and co (or to pose it even more startlingly: could the Chinese way of regulating info-capitalism turn out to be the historic norm?). After all the child labour bosses of 19th century Manchester, before Peterloo, though it was the end of the dynamism of the system when the law intervened to stop them working children to death. On the contrary, the early regulation of the factory system, arguably, laid the basis for the whole 19th century expansion of capitalism.

In short I propose what could come out of this is a highly regulated and more stable info-capitalism. As I am writing this over my cornflakes, I will not endure the treatment for it. But it's a thought. Like I say. Discuss!

Goldman Sachs and Morgan Stanley have applied to change their legal status: they will become regulated like more complex banks which both take deposits and speculate on financial markets. In return for more regulation they will get access to easy borrowing from the Federal Reserve, and it will be legal for the government to bail them out if they collapse. So what's going on?

Nouriel Roubini of NYU's Stern business school predicted this in July, so I will simply quote his sage :

"The problem ...is that broker/dealers use the same model as banks -- borrow short and lend long -- only they borrow on even shorter timeframes, use more leverage, and don't have the kind of government backstop banks enjoy.In the wake of Bear Stearns' demise, which showed how brokers are vulnerable to a "run on the bank" if they can't get overnight funding, the Fed temporarily opened its discount window to brokerage firms. But making that option permanent means submitting to the same kind of regulation and capital requirements as banks; that, in turn, means a very different business model -- and much lower profitability -- for Wall Street firms, whose current business model is "not viable,".

This goes to the heart of the problem: our understanding of solvency, the most basic of accounting and regulatory concepts, is challenged by this crisis. Since the broker-dealers' model is to go purposely short of cash, if the are not liquid they are not solvent....

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Since everybody else is doing it, I will publish my top 5 Northern Soul tracks of all time, to coincide with the 35th of the opening of . Apparently some of my former mates are right now trying to have an impromptu in a car park in Wigan!

UPDATE: Unitl 4am the webcam is live !

Its not as completely sad as being a retired Elvis lookalike, because while Elvis invented rock-n-roll we invented dancing all night using nothing stronger than Coca Cola, and that's still going!

Here are my top five tracks: I paid £7 for the record at the top of the list in 1976. But they are all on Youtube now, together with hundreds more.

1. Little Anthony & the Imperials:

2. Timi Yuro

3. Mel Britt

4. The Four Seasons

5. Del Capris

You can hear from track 3 that funk actually was rearing its head by this time. I am actually in one of these YouTube videos! A prize to anybody who can spot me: I need URL and timecode. It's gonna be harder than Spot The Ball. Closes 30 Sept 2008. Hit the comments button to try it.

Yikes! I seem to have caused a run on Altlas Shrugged. Everyone is queuing at the doors of the Ayn Rand meisterwerk to withdraw their own metaphoric lessons on the week that's passed - ranging from blogger to Huffposter and ex-Goldman guy . They may soon have to shut the doors and take Atlas Shrugged into public ownership.

Maybe I should have gone long on , it was the 50th anniversary year last year and there is a good Penguin edition out. It would certainly have been the bottom of the curve - weirdly September 15th, day of the Lehman collapse, was a on Technorati (actually, even for the book is down), which is weird given Angelina Jolie is about to crest her method-acting in Beowulf by starring as Dagny Taggart).

However on further investigation it turns out that I was not the first to have the idea. See , the site which measures "latest news and commentary on Ayn Rand and Objectivism" to find out who had the idea first. So far nobody has mentioned Ayn Rand at Labour Party conference, which I have been watching dozily all afternoon. They have mentioned "freemarket capitalism" though, and not in a nice way.

Warning: the value of your Atlas Shrugged metaphor may go down as well as up. Any forward looking statements in this blog etc etc....

It is Friday, Day Five of the Wall Street meltdown. I have just reported on Â鶹ԼÅÄ World News America (10pm Eastern) that Democrat lawmakers plus Paulson and Bernanke have agreed in principle a massive deal to get rid of the bad debt in the US banking system. There will be a "power" rather than an institution but essentially as with the Resolution Trust Corporation in the 80s, and the Â鶹ԼÅÄ Owners Loans Corporation in 1933, a government backed "bad bank" will be created and all the bad debt poured in.

So far about $500bn of bad debt has been declared. Expect this now to double as banks rush to dump their nuclear waste into the Federal Reserve's landfill site.

Is it a good thing? Well it will do two good things: it will prevent homeowners in America, and beyond, from being repossessed; and it will stop a 1929 stock market crash. But it is testimony to the fact that nothing else the Fed/SEC/Treasury did actually worked. The decision to sacrifice Lehman, bail out AIG, pump 180bn into the banking system, take junk bonds as collateral for AAA gilts etc, the banning of short selling - none of it actually staved off the threat of a retail bank collapsing or spillover into the world of airlines, departments stores and car factories.

Once it is clear the state is taking on the bad debt, bank shares will soar. There will be immediate and tangible private gain in return for the public nationalising the risk.

So what is the quid pro quo. First, it's possible that the taxpayer will make money: this happened when Norway nationalised two major banks and I am told also happened with the , set up by Franklin Delano Roosevelt in 1933. Maverick bank analyst Bruce Packard of Pali International should feel vindicated: he put out a note predicting this, more or less, four weeks ago, and kept on reminding the world that HBOS was the riskiest bank in town.

Second, I am guessing the Fed has assured Congress that it will get to categorise the debt, and put a price on it, not the busted banks offloading it. This will ensure the best possible deal for the taxpayer, though it is still a bum deal.

Third there has to be some kind of regulatory price. This is what nobody knows right now: has the Fed/Treasury got the bottle to impose on the investment banks some kind of separation of powers deal as in the 1933 , which effectively banned investment banking as we know it by preventing deposit takers from market speculation?

There is only one problem. The last of HOLC's debt was paid off in 1951: these solutions impose a stagnant, effectively state capitalist solution, on the finance sector.

We will know by Monday if it has worked. Only our kids will know if it was the signal for a decisive regulatory turn that killed off speculative bubbles and stabilised the system long enough for the politicians to regain control of the economy from the investment bankers.

I am off to bed and to catch a plane, hoping that British Airways' credit is still good at the airfuel pumps so I can be on Newsnight tomorrow night to update you on this. For now, on the last night of my American Journey, I can only leave you with the immortal words of the late, great : "Toto. We're not in Kansas anymore".

If you want to read something that sums up where we are, and at the same time is an advert for measured, balanced, highly-informed team reporting, read in the Wall Street Journal.

I'll sum it up: the financial crisis is gathering momentum because round one, the collapse or forced acquisition of the weakest links in the chain, hasn't been enough to stem the panic. So as well as interbank lending drying up, we now see totally solvent institutions like Goldman Sachs pressured. But the big difference is that the authorities, at least in the USA, are firefighting effectively: if they'd only regulated as aggressively as they are firefighting this would not have happened.

OK so where next? What's happening is that in the process of unwinding complex and risky derivatives contracts the financial institutions are "deleveraging": this means they are doing the equivalent of a rapid paydown of several credit cards at once out of your salary cheque. If I do this, personally, it leaves me short of cash: no takeaway curry, no wine dearer than a tenner, no cabs, no stripy shirts from Etro of Bond Street. In short, eventually, this will impact on demand in the real economy.

Already I would imagine the impact of seeing HBOS rush into the arms of LloydsTSB will have impacted on consumer confidence, especially among the older generation that knows and fears where banking crises can lead. But this is just the beginning.

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it's now clear that the Fed's intervention into AIG is a state takeover of unprecedented scale: an 80% stake, the management ousted and Hank Paulson said to be mulling further "systemic moves". Meanwhile in the UK a government-brokered takeover of HBOS by LloydsTSB is under way.

On top of Northern Rock, Fannie & Freddie and 11 US deposit-taking banks now in public ownership (or "conservatorship") this is turning into a modern version of state capitalism: of NYU told me yesterday that the 500bn losses declared to date would amount to 2 trillion, and that whole swathes of the finance system will end up publicly owned. I am beginning to believe him. (He is calling the USA the and is scathing of Paulson's intervention.)

On US TV they are calling it "the end of the age of greed" - and both parties are vying with each other to slag off Wall Street, with McCain's rhetoric hinting at criminality on the part of some of the recently failed companies. One network signalled this with a rolling tickertape caption that simply said: "The candidates get real".

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I am writing this on a train from NewYork to Washington. I have just reported on Newsnight that the US government is considering "taking AIG into conservatorship". There is a pink sky over New Jersey. The brakeman on the Amtrak is whistling Richard Halley's Fifth Concerto.

Actually this last detail cannot be true because, as all afficionados of Ayn Rand know, Richard Halley did not write a Fifth Concerto. He retreated to Colorado like the rest of America's disgruntled capitalists and creatives until the described in Atlas Shrugged took off.

Think I am hallucinating? Well I blame Dagny Taggart for what's going on with AIG. Dagny Taggart is the heroine of ; and Atlas Shrugged (1957) is a kind of Lord of the Rings for people who dont like heavily-regulated business. In it Dagny single handedly takes on the forces that are holding back American entrepreneurship: sloth, bureaucracy, unions, intellectual property theft and over-regulation.

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I am writing this in Washington at 3.33 am GMT. There's been a dramatic day on Wall Street and it's not even open (actually they had to open trading this afternoon to clear the decks for tomorrow's potential meltdown). Here's what we know so far:

1. The US government has refused to put money into bailing out Lehman Brothers; Barclays Capital have pulled out of the rescue attempt, which has been orchestrated by the Treasury, the Fed and the SEC but so far failed. Lehman is set to file for bankruptcy as early as, er, around about now.

2. In a moment of contagion the massive insurer AIG, itself facing untold bad debts, is looking at selloffs or breakups, racing to save itself from collapse.

3. Bank of America just bought Merrill Lynch. For fifty billon dollars. Kersplat. Just like that.

I myself have been at the centre of the action all day: not in DC, not in Wall Street, but in the blighted inner city of Detroit. Here there are foreclosed properties, torched properties - ranging from 30k in value to 600k - and the 600k ones look like art deco mansions that would go for several million in London. This is the real epicentre of the earthquake that has just hit Wall Street: the bad lending on a massive scale that forced debt down the throats of low income people like foie down the throat of a gras.

Now, instead of writing off, oh, just a few billion here or there two major companies have had to write themselves off in their entirety. Lehman will go bust, effectively; Merrill is selling itself at half its value; AIG's predicament is right now too opaque to predict.

So what's caused this Sunday afternoon throat slitting?

First, the insistence of the US government that it would not put taxpayers money into the bailout as it did with Bear Stearns. It has just, as I am writing, issued a decree that the Fed can take all kinds of collateral against short term loans (maybe some of the Piccassos on the top floor offices of these banks, certainly their near worthless paper); but it will not bail them out.

This is a signal moment. It signalled to the banks in the worst trouble that they had no chance of being saved by the American taxpayer so instead of just one going under, three are going at once.

But don't take this at face value. It looks to me, reading the reports which are all sourced from "those close to the situation" that other banks took umbrage at the prospect of Barclays or BoA taking over Lehman at rock bottom prices and walked away. On Newsnight last week I said:

"If there is a state bailout of one of these banks then the whole blessed lifestyle of the investment bankers will have to change. The high rewards, supposedly for high risk, will have to be reined in if it turns out the taxpayer is the ultimate risk taker. The whole regulation of investment banking will have to change"

Now I do not know all these gentlemen personally, but I suspect that, given that choice, they would rather see investment bank regulation stay as it has been, asleep at the wheel during the entire Bush administration and for much of the Clinton years, allowing vast institutions to lend so profligately that they are TODAY brought down

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When I was 15 years old I ran away from home for one night to dance in the world's greatest disco. The year was glamourous: 1975; the location not so glamorous - an old dance hall in Wigan, (a mining town in the North of England). Actually I was two years in advance of being nominated by Billboard Magazine as the world's greatest disco; and three years of being allowed to go in there legally. I've been remembering my time as a fanatic today as I have toured Detroit....

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I'm in the north midwest of America trying to see for myself how bad the economic situation is. What's clear is that subprime has hit America like a rash, picking out with "for sale" signs all the places where predatory lending doomed people to foreclosure. Lehman Brothers is fighting for survival this morning and Newsnight will bring the latest on that if there's a big development. However meanwhile I am right out amid endless fields of corn.

Amid the economic gloom there's also an upside: ethanol is the big new industry here in Indiana. I visited a brand new $117m ethanol plant yesterday: it's impressive - greenfield site, 30 acres of vats and piping, state of the art, and one of those satisfyingly simple processes whereby a lorry load of corn (looking a bit like rock hard versions of what you get out of a can of sweetcorn) drives up, tips into a silo, it gets mashed up with a reagent to make it ferment, then out of huge vats comes 17% alcohol liquid which goes straight into a train full of tankers and on to a petrol refinery to go in your car.

The site, which ground its first corn while we were there, was full of big construction guys in hard-hats and sunglasses. But once it's operational, here's the catch, the entire plant needs only four people to run it.

I've been asking people I meet: who or what is to blame for the economic downturn here in the US. Interestingly, the regular answer I get is not "Bush" "Washington elite" or even the investment banks. It's "greed". This country is still at heart governed by biblical values: it reminded me that when the banking industry pushed for deregulation in the 1970s one of the first things it had to do was abolish state-level "usury laws" limiting interest charged to 10%.

In a move that has shocked no-one who talks to Conservative politicians, the party's spin doctors have put out in the Times, Sun and FT that the Shadow Chancellor is "rethinking" the Conservative commitment to match Labour's public spending commitments until 2011.

Here's what I am told: I've been trying to stand it up but now consider it stood up. That the party would commision an independent review of the public finances on achieving office, and that if the said finances were in any way found not to add up, would summarily reverse its commitment, maintaining the pledge on core services like health and education but abandoning it on, for example roadbuilding. This has been "mooted" in Cameron-Osborne circles.

However, I now think the political situation is moving fast enough for the Tories not to need this cunning plan. Since Gordon Brown's CBI speech last week it has been crystal clear that the government believes Britain is "under-borrowed" compared to other major economies: 37.5% of GDP on official figures (though as commenters on the blog point out, what happens if you include PFI?)

I had expected the coming FISIM rule change in measuring GDP to give heardoom to borrow several billion more without breaching the sustainable investment rule (40% of GDP). I read Gordon Brown's speech as saying, forget 40% as a rule - as Johnny Depp puts it in Pirates of the Caribbean, "it's more of a guideline".

Hence we have the makings of a serious political battle shaping up, even before we get to Crosby (see below): I expect Labour to cut taxes in the PBR, focusing the benefits on low-income voters, and pay for it out of borrowing, pushing the national debt higher than 40%. I expect this will - and is designed to - give the Conservatives political "permission" to abandon the "match your spending" pledge and thus open clear water between the parties.

Given much of David Cameron's fiscal philosophy has been shaped around the idea of delivering a lower tax take from growth rather than actually cutting taxes, this now has to be re-thought: there's no growth, the tax take under the present budget is falling off a cliff and he will have to cut spending unless he raises borrowing if he becomes PM.

Conservative insiders believe in any case the public mood is changing: we've had the tax rises, public services have not got better, goes the argument, so the willingness to pay more tax declines; especially in a period of high inflation. Anecdotally - though I do move more in the world of cabbies and cameramen than social workers - I think they might be right: ie I think that is becoming the prevailing public mood among the tabloid reading classes.

Now to Crosby: Will Hutton on Newsnight clashed amiably with economist Diana Choyleva over the need for a bailout of the mortgage market. We could see two banks go under if house prices decline by 30-40% said Will; let it fall said Diana. Throughout Will was mightily worried about a bank falling over and mightily pro the Crosby solution (now dwarfed and precedented by the Fannie/Freddie nationalisation) of a £40bn extension of the Special Liquidity Scheme to underpin mortgage issuance.

My guess is that Will's thinking reflects an emerging line of thinking in government. They will probably split the difference, as they always do, but they will do some form of Crosby mortgage bailout.

Actually what is emerging here, and what has already emerged in the USA, is a battle royal between the two dormant economic philosophies that - in my youth - used to underpin politics but which under Blair+prosperity seemed to go away: monetarist neo-liberalism, which says the market mechanism must sort out crises, no matter what the short term pain; and Keynesian liberalism which says the state must underpin the market. Small state versus big state is also coming back; and rows over public spending with it.

Virtually every political institution in Britain is either lined up over all this or split: Bank of England calls the Crosby suggestion dangerous; Bank of England ready to wind up the Special Liquidity Scheme. Treasury refuses to rule out Crosby etc.

And the interesting thing is that a whole new generation of politicians, Labour and Conservative, is having to grapple with it having grown up believing, implicitly, that this would not come back; that we were "post" this ideological divide; and that "triangulation" solved everything.

Stand by. The US Treasury is about to take over Fannie Mae and Freddy Mac, the two giant mortgage underwriting companies that underpin the entire US property market. We knew they had the power to do this since 23 July, when legislation was passed allowing Hank Paulson to do this (see this for a study in market self-delusion).

[Update: it has just been .]

But the plan was they would not need to do it: the "facility" itself would stave off the need to use it (a bit like the theory of dreadnoughts before World War One). Indeed Fannie and Freddie have been issuing new debt and, at one point, their shares even rebounded. So this was not in the script. The 20% share price slide that took place after hours on Friday was a response to new information that their balance sheets - the ratio of capital to the debts they are owed - were weaker than expected. Fanny and Freddie are finished in their current, half-life form.

The size of the event is so massive that I think we are already seeing the same kind of denial behaviour that accompanied the war in Georgia; Then it was, "Hey the whole post-1989 world order has collapsed! But wow, look at that Olympic opening ceremony!" Now it's Obama and McCain "welcoming" the move, statesmanlike, before moving on to the issue of earmarks, porkbarrels etc as they tour the swing states. The two companies will be taken into "conservatorship" - a kind of economic equivalent of "arguido status"....

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I am going to America next week to report on the economics of the US presidential race. I'll be in the north-midwest (Wisconsin down to Arkansas I think) - so if you've a story to tell about the political economy of this election there, let me know. For now I'm cramming it all in like a final-year medical student - here's my impressions.

1. Obama's trying to "own" the economic issues, McCain to own "security" in its wider sense. So the economics plays a different role in the two campaigns. Both have produced bullet-point economic "plans". Read Obama's and McCain's .

2. Its as plain as a high school text book that this is a battle between market Keynsianism and "small state" neo-liberalism - as far as the rhetoric is concerned. McCain will slash public spending, cut corporate tax, cut social security and cap state health spending for the elderly and the poor. All with the aim of balancing the US budget by 2013 (it is 800bn in the red now)....(continues)

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Here is one key passage of Gordon Brown's Scottish CBI speech:

"While never complacent about our economic prospects, I am also cautiously optimistic about the long-term resilience and underlying strengths of the British economy. Because at root our economy today is better placed to weather any global economic storm than it was in the 1970s, 80s or early 90s."

I will examine the claim in a minute. But the important thing to note is the change of emphasis. While he has said this before, he has usually also used the "better placed" phrase in relation to other major economies, such as in his May 2008 Guardian with Nicholas Watt:

"I also believe that Britain is better placed than most to withstand the global turbulence because of the decisions that we have made both recently and in the past."

And the source of the PM's optimism in today's speech is not just the policies he's pursued over the past 10 years, but the ones he's formulating now:

"It is the actions that governments take and the policies they pursue in periods of economic slowdown that can determine their comparative success and competitiveness in the upswings. Once we are through this global crisis, we will continue to enjoy the opportunities that the global economy offers to us."

This is where I think, in the unlikely event of Newsnight getting him in front of a camera, I would like the questioning to start....

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Inspired by the hype I have just tried to download and install Google's new browser, Chrome. It went like a dream: two clicks, small download file and then. Eek! Kaspersky Antivirus did one of those Wacky Races handbrake turn noises and filled my screen with red writing, the gist of which is that it was trying to "register its copy as an autorun startup object". It continued:

"Riskware - programs or components which can be used by hackers to steal data from the computer or local network. If the user permits such a program to run, it is advisable to add the program to the exclusion list. For more details please follow the link."

So I have binned it. What it was trying to do was to get itself on a kind of exclusive guest list that is invited to my party without me knowing, so that it starts up when my computer starts up.

Given that hackers have discovered a vulnerability to this software (see ) it's probably a good thing that Kaspersky did this, although I find Kaspersky too a little bit fussy at times.

And given that Google knows its main rival, Microsoft, has chosen data security and privacy as the big issue with which to bash the Mountain View Monster, I wonder why they have put something in the install process that, without asking, makes part of the programme a startup item, thus, as Alistair Darling might have put it, p***ing me off.

There's more about Chrome . Big PR success for my who had to launch the thing on his first day on the job. I hope he is enjoying the free pumpkin seeds and fussball tables at Google's UK HQ.

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My colleague Gavin Esler interviewed Alistair Darling today. You can see the whole thing on the Â鶹ԼÅÄ iPlayer: it ranges across the OECD prediction of recession and his "worst for 60 years" statement. But for policy wonks the most interesting passage is where he repeatedly refuses to rule out the Crosby-proposed option of underwriting the UK mortgage market with government bonds. In fact he seems to steer us towards the fact, as in Crosby, that there's only half of the mortgage market currently fundable through savings - and if those good old wierd and wonderful collateralised debt vehicles don't come back - and they're not coming back - we need something to put in their place.

Bank governor Mervyn King said this month the proposal was "dangerous". For the government to go for it would provoke a clash with the bank and would certainly involve some rewriting of the fiscal framework - if not the rules themselves then the definition of what is borrowing.

Let's be clear why they are even considering this: if the source of mortgage finance is halved forever, then the dream of universal home ownership is over, and so is the boom based on equity withdrawal.