Amid the turmoil of the 2008 financial crisis a myriad of events unfolded that the general public knew nothing about, writes New York Times reporter Andrew Ross Sorkin in a new book titled "Too Big to Fail."

Wall Street fell from the dizzying heights of good fortune to calamity in a matter of months. To a large degree it's still to early to tell whether financiers and politicians involved made the right choices.

"At its core 'Too Big to Fail' is a chronicle of failure -- a failure that brought the world to its knees and raised questions about the very nature of capitalism," writes Sorkin in his behind-the-scenes account.

He spoke with Reuters before giving a lecture at the London School of Economics on Thursday.

Problems sparked by the financial crisis have not gone away, but have been transferred to the public sector, economist Roger Bootle posits in his new book.

In “The Trouble With Markets: Saving Capitalism from Itself” Bootle argues that in large measure, the underlying cause of the financial crisis was the result of an idea that markets work, and that governments do not.

“Despite the trillions of dollars lost, and despite the worries of millions of people, more than this — much, much more — is at stake,” Bootle writes. “For this crisis has delivered the killer blow to an idea that has underpinned the structure of society, framed the political debate, and moulded international relations for decades.”

Bootle, director of Capital Economics and an economic advisor to business accountancy firm Deloitte, reflects on the pitfalls of the corporate system and puts forth his ideas on the future of capitalism.

He discussed his book and his economic predictions with Reuters at his London office.

It may not be tax and spend exactly, but it’s definitely tax and borrow.

For the best part of 12 years, Labour has pursued essentially conservative (with a small ‘c’) economic policies, steadily underburdening itself of the ‘fiscally unreliable’ tag that some earlier Labour administrations were (wrongly or rightly) saddled with.

And for most of the past 12 years, as the global economy steadily expanded and Britain’s along with it, with aggregate wealth rising smoothly, Labour looked strong at the helm each time the budget came around.

But since the global economic crisis hit in late 2007,  it has become much harder for the government to keep a tight rein on the fiscal strings as growth has taken a hit, unemployment has risen sharply, and tax receipts have declined. 

Last April’s budget was a tough one for Labour, but Wednesday’s budget may well go down as the one that really showed the government reeling as it tries to keep a grip on the purse strings in some of the most challenging economic circumstances imaginable.

The numbers tell the story and are in some cases eye-bogglingly huge.

Finance minister Alistair Darling says the government will have to borrow 175 billion pounds this year and almost as much next year (173 billion) as it tries to plug a widening gap in its finances. WIth the Debt Management Office already struggling to raise funds (if one recent debt auction is anything to go by), the borrowing requirement could be a very big ask.

At the same time, tax receipts as a proportion of gross domestic product are going to be down, Darling said, and growth is set to contract this year at the fastest rate since World War Two with unemployment edging relentlessly higher.

To try to boost government revenue, Darling has unveiled a new income tax band, although it’s unclear just how much can really be raised from taxing the richest 1-1/2 to 2 percent of the population an ever larger portion of their income.

From next April, those earning more than 150,000 pounds a year will have to pay 50 percent tax, while their benefits allowances will steadily be cut, as they will be for those earning more than 100,000 pounds.

Those new tax policies represent something of a bust for Labour. For 12 years they’ve kept on the right side of business and the wealthy, encouraging entrepreneurship and positioning themselves as a partner with business. But the new top rate of tax suddenly begins to look like a Labour policy of old —  a “tax-the-rich” gambit.

It remains to be seen how the Conservative opposition – now widely expected to win the next election, which has to be called by June 2010 – respond, but on the face of it the high borrowing and higher taxation would seem to play ever more into their hands politically, while threatening them with a dire economic legacy should they win the next election.

For Darling, it may be the best that can be done with an awful hand. Maybe the borrowing can be met, the spending measures announced will have the desired effect, kickstarting economic activity and getting the wheels of commerce turning. Maybe. But it’s a slim chance will little more than a year to go before an election.

Borrowing and taxing may be what’s needed (or the only means available) to try to right the economy in this uncertain time, but it’s unlikely to help Labour’s prospects of holding onto power.

He loves the Queen and the British people. Truth be told, President Obama was always going to be a hit on his first overseas trip.

But Gordon Brown probably could not believe his luck. The prime minister just could not stop grinning as he stood next to the new president at a news conference in the Foreign Office ahead of the G20 summit.

He must have always been hoping for a bit of the Obama magic to rub off on him and revive his battered ratings but he can't have expected the ringing endorsement he got.

Tony Blair and George W Bush. Ronald Reagan and Margaret Thatcher. Britain has always liked to make much of the special relationship between it and America and any doubts it was in danger under Obama could be put to rest this week.

Obama looked on intently as Brown made his opening statement, referring to him by title.

But the formality dropped as soon as it was Obama's turn, as he thanked his hosts "Gordon and Sarah" and said he had been discussing dinosaurs with their two sons.

The United States and United Kingdom have always stuck together, he said. That's why he was pleased that his first overseas trip was to visit Brown.

Brown's face immediately lit up. Soon he was calling the president "Barack", joking that he was keen to introduce him to
his friends in the British press.

Even a question about Brown's regular remark that the crisis was made in America passed without a hitch, as Obama readily accepted the United States had to share some of the blame.

Asked what advice he would give to Brown on winning an election, Obama said: "The only advice I would give him Gordon is the same advice I gave myself -- good policies are good politics."

But the presidential hand on Brown's back as the two men left the podium may be the biggest helping hand of all.

Finance ministers and central bankers from the G20 meet this weekend in the English countryside to discuss the world's financial and economic crisis. With this in mind, MacroScope asked a number of economists what they want to see from the meeting and the G20 summit to follow later and what they expect to see.

The answer, in short, appears to be that much is needed but not much expected.

Paul Mortimer-Lee, head of market economics, BNP Paribas:

"There will be progress on agreeing that regulation needs to be more effective and more effectively co-ordinated on a global scale but I am unconvinced we are going to go a long way further.  Some populist posturing on bank bonuses etc should be expected. The less is achieved in other areas the more this will get played up. On bank recapitalisation, they will all agree strong capital is a good thing, but in no way do I expect a concerted plan -- it's driven by events and the exigencies of the local banking system.

"I would like to see progress on the international financial architecture/the IMF and its resources. Maybe we'll get some new facility and some agreement on more new cash ... but a radical overhaul requires the power structure to be rejigged -- more power to the (emerging economies) and less to Europe. This is not something European politicians will want to be high profile when it comes out."

Sarah Hewin, senior economist, Standard Chartered:

"The economic data continue to worsen and markets remain in a state of fear. So the best outcome from the meeting would be a co-ordinated response to frozen credit markets and collapsing global economic activity.

"A wish-list would include announcements on: fixing banking systems, including cleaning up banks’ balance sheets by dealing with toxic assets; more and co-ordinated fiscal stimulus and wider adoption of quantitative easing; expanding the size of the IMF to enable it to support vulnerable countries; and commitments against protectionism.

"But the experience of previous summits is not encouraging - apart from increasing IMF resources and making the right noises on protectionism, we are likely to see few real progressive steps taken."

Gabriel Stein, director, Lombard Street Research:

"The G20 meeting, like almost all summits, is a waste of time. Most of the work will have been done beforehand and the actual meeting could just as well be delegated to functionaries. Its main purpose is political.

"It will issue a bland communiqué telling us that they agree on the need for further reforms and oversight of the world financial system, but that while co-ordination is useful, the actual details are better left to each country/region with its specific issues and problems. It will also warn against protectionism."

Alessandro Bee, economist, Bank Sarasin:

"I would like them to come up with a plan to solve the credit crisis, a coordinated plan. Also apowerful plan with some clear-cut strategies. What we see now is more like a series of individual plans that sometmes materialse and sometimes not.

"I would expect some annoucements rather than real decisions.*

So that's them. What about you? What do you want to see and what do you expect to see?

(Reuters photo: Peter MacDiarmid)

    Alistair Darling may think it’s time for a bit of collective
responsibility, but anyone who thinks Gordon Brown is about to
apologise for Britain’s current economic travails should think
again.

    The prime minister, who loved to boast about abolishing boom
and bust when he ran the Treasury for a decade, is now
contending with the economy shrinking at its fastest pace in
nearly three decades and the prospect of millions out of work.

 The mighty banks that were given free rein to make London
the world’s number one financial centre are now on their knees
and reliant on taxpayer support.

Darling, the man who replaced Brown at the Treasury, now
says it is a time for humility — ministers had a collective
responsibility.

Brown doesn’t seem to think so.

    It’s a global problem, everyone’s in the same boat, he says.

    Asked point blank in the White House Oval Room whether
Darling’s comments amounted to a government apology, Brown just
said: “There has got to be big regulatory change…We’ve learned
from what has happened in these 10 years.”

    That’s probably it for an apology for now.

Bankers, auditors, money-market speculators and regulators all came in for criticism at the Church of England’s General Synod during a discussion on the implications of the financial crisis and the recession.

The City had lined its pockets, regulators had not done their job properly and auditors had signed off financial deals that should not have seen the light of day, the synod heard at its meeting in London.

The result is a deep recession, the first since the early 1990s, with Britain suffering a shrinking economy, rapidly rising unemployment and falling output.

But the Archbishop of York, John Sentamu, suggested everybody was to blame.

“We have all worshipped at the temple of money,” he said. “We have been guilty of idolatry: the worship of God falsely conceived - which is deadlier than either heresy or sin, for it is the prolific source of each. It is this idolatrous love of money, pursuing profit without regard for ethic, risk or consequence, which has led us from orientation to dis-orientation.”

He said the solution lay not only in economics and politics, but also a “deeper vision”.

“It is not about what governments can do for us but what we can all do,” he said.

Various suggestions were put forward by synod members, including working with counsellors, supporting credit unions, donating 10 percent of salary and opting for a gentler life.

They sympathised with the near 2 million unemployed and recognised that some of their own communities were still suffering from the economic downturn of the 1980s, with generations of families still unable to find work.

But the Bishop of London, Richard Chartres, while empathising with the 150,000 people in his diocese who are likely to lose their jobs, said some may feel relief from being made redundant.

“It is difficult to know whether to sympathise more with those who have lost their jobs or those who are left carrying even greater loads with higher targets and fewer colleagues,” he said. “Sometimes indeed people seem to be relieved to get off the treadmill and to be given an opportunity to reconsider what they really want out of life.

“One of the great implications of this turbulence for us is to re-boot our sense of what a truly flourishing human life consists of. The Crack-berry culture is dangerously addictive and coming off is notoriously difficult.”

The comments were less strident than those made since the onslaught of the financial crisis.

Sentamu in September had accused short-sellers, those who speculate on falling share prices, of being “bank robbers and asset strippers“. While the Archbishop of Canterbury Rowan Williams in December said the credit crunch was a reality check, a reminder that “fairy gold is just that“.

He also criticised the government’s fiscal stimulus package, likening it to “an addict returning to a drug”.

But there were still criticism from synod members.

“It is very ironic that we have got to the point now where we have massively bailed out big banks, and bailed out car manufacturers in the States doing to them what we have not done for many nations in the Third World,” the Bishop of Durham, Thomas Wright, said.

“We are in severe danger of the very rich doing to the very rich what they have failed to do for the very poor, and that is shameful.”

But not everybody was angry with the financiers.

Susan Cooper, from the London diocese, said she was “a little disconcerted” by some of the comments.

“These are people too alongside the rest of us and they do not need vilifying at this stage. Some of them are members of our congregations,” she said.

Interest rates have been cut again - to a record low of 1.5 percent. As they get ever closer to zero, the impact of rate cuts will become more and more limited. So what can central banks do to ease the economic pain?

“Quantitative easing”, or what non-economists call “turning on the printing press” is one of the options.

Here is our guide to how it works and which countries have used it:

WHAT IS QUANTITATIVE EASING?
– Quantitative easing refers to ways of boosting economic growth after traditional monetary policy tools, such as interest rate targets, have been exhausted.
– Central banks flood the banking system with masses of money, more than is needed to keep official interest rates at zero or a low rate, to shore up financial systems and promote lending. They usually do this by buying up large quantities of assets from banks.

WHO HAS USED IT?
* JAPAN:
– The BOJ adopted quantitative easing, going beyond keeping interest rates at zero, in March 2001 after the economy was hit by the bursting dot-com bubble and remained stuck in a battle with deflation.
– Many experts, including some BOJ policymakers, were sceptical whether the policy had any direct effect in reviving the economy, but most agreed it helped limit deflation and avert a more serious banking crisis.
– The extra fund cushion meant banks, burdened with massive nonperforming loans, avoided a liquidity crunch and were able to take bolder steps in cleaning up their loan portfolios.
– Instead of a traditional policy of raising or cutting short-term rates, the BOJ set a target for the amount of money it force-fed into the banking system. The funds were injected mainly through the BOJ’s purchases of government and commercial securities from banks. The policy ended in 2006.

WHO IS USING IT?
* THE FED:
– Economists agree the U.S. Federal Reserve has adopted a form of quantitative easing in its efforts to stabilise the financial system and help the economy, though in a different way from what the BOJ conducted.
– The Fed cut the benchmark federal funds rate target to a range of zero to 0.25 percent, saying it would help markets and stimulate the economy by keeping its balance sheet at a high level.
– The Fed has committed to purchasing large amounts of mortgage-related debt to help the housing market, and it is considering outright purchases of government bonds.
– Since the bankruptcy of Lehman Brothers in September, the Fed’s array of measures to shore up the financial sector has already caused its balance sheet to more than double in size to a record level above $2 trillion.
– The Fed said that its dramatic policy action last week did not signal increased concern about deflation but a determination to improve lending conditions by lowering mortgage rates and other important financial rates.

WHO MAY USE IT?
* BOE:
– Bank of England policymaker David Blanchflower said last month that monetary policymakers would be right to consider using extraordinary measures, including quantitative easing, to boost the economy and prevent a deflationary spiral.

* BOJ:
– If the global recession deepens, the BOJ may return to quantitative easing early next year. Naoki Iizuka, senior economist at Mizuho Securities, said the BOJ could resort to cutting Japanese rates to zero as early as January to contain the slump. Some analysts see the central bank going even further by reverting to quantitative easing.
– Using this policy could be hard to swallow for BOJ Governor Masaaki Shirakawa who, as a central bank bureaucrat, was involved in crafting the policy and has warned that keeping rates too low would distort money market functions.
– Senior BOJ officials have said the bank was not ruling out any policy options as the economy, already in recession, faces the risk of suffering its longest contraction on record.
– Shirakawa told parliament last month quantitative easing had a certain effect in stabilising the financial system, adding that he was examining the effects and side-effects of the policy.
– Like the Fed, the BOJ is trying to target troubled markets that are affecting the economy, such as the commercial paper market in which companies raise short-term financing. The BOJ said last week it would buy commercial paper outright and would boost the amount of its monthly government bond purchases.

(Guide compiled by David Cutler and Jijo Jacob)

Would you give up your laptop, your iPod or even your mobile to help pay the bills?

Some devices that seemed like luxuries just a few years ago are now seen by many people as necessities.

With money scarce, jobs threatened and bills rising, it would be interesting to see if the trend for households to acquire more and more hi-tech goods starts to decline.

Common sense suggests that top-end electronic goods wouldn’t be high on most people’s shopping lists in the current climate.

Credit has dried up and borrowing cash to buy a new flatscreen TV doesn’t appear to make much sense.

Undaunted by the financial crisis, Stuff magazine is hosting its annual gadget show this weekend at the vast ExCel conference centre in Docklands, east London.

Visitors can tour dozens of stands showing off everything from a pair of loudspeakers costing 70,000 pounds to a hovering chair worth nearly 6,000 pounds.

But the question is: Will people get the urge to buy anything?

Will you be tightening your purse strings or browsing online for a bigger TV to help while away those long nights at home now that you can’t afford to go out?

Since banks and world financial markets started collapsing over a month ago, politicians, commentators and people in the street have pointed the finger of blame in a variety of directions: at bankers, regulators, hedge fund managers, mortgage lenders, short-sellers and speculators, among others.

Now, it appears, the BBC is also in the firing line.

The broadcaster’s economics correspondent, Robert Peston, has broken several major elements of the unfolding story, from which banks were on the brink of collapse to the details of how the government was going to set about bailing them out. BBC radio interviewer John Humphrys has also been at the forefront of the story, grilling government leaders, especially Chancellor Alistair Darling, about the crisis and how the country, and the rest of the world, ended up in it.

But viewers and listeners to the BBC are now complaining that the broadcaster itself is responsible for fuelling the financial meltdown, with negative stories driving share prices down, and gloomy reporting making the atmosphere ever darker and more ominous.

“If the BBC sent John Humphrys and Robert Peston on holiday for a month, the financial crisis would be over tomorrow,” one listener wrote in to complain to a BBC radio programme on Friday. 

The email was the latest in a wave of complaints the BBC has received about their reporting on the story. Until now, the broadcaster’s management has been reluctant to get involved in the debate, but on Friday a senior editor stood by the journalists’ reporting and the tone which the broadcaster has adopted. 

“Our journalism is not second-guessing what effect it is having on this or that share price,” he said.

“We have a duty to the audience.. Our reporting has focused on very important areas of public interest.

“It is in the greater public interest for us to report the facts as we have done.”

With millions of people facing an impact from the crisis and looking for someone to blame, there’s little chance the complaining will stop any time soon.

What’s your view? Do you think some of the reporting on the financial crisis, whether by the BBC or by newspapers and other media has somehow made the situation that it otherwise would be?