European leaders were all looking smug earlier this week as they pumped another $250 billion into the markets and announced that the financial crisis was officially over. None more smug than Gordon Brown, of course, whose plan they had adopted.
The fact that they had been able to get together and decide anything at all gave the markets a brief boost. But now the European stockmarkets are sliding again, and our great leaders seem unusually shy about media appearances once again.
Investors know that the $250 billion will have to come from somewhere, and of course it will come from bigger borrowing, bigger deficits, rising taxes and cutbacks. The recession that everyone was waiting for has suddenly got worse. And because Europe and the US aren't going to be expanding so fast, other countries are being hit too, particularly those like Russia which produce the oil, gas, minerals and other commodities that fuel Western economic growth. The downturn just got global.
Meanwhile the bail-out plan is not alloyed good news for bank investors. It came with the price of some political demands, like banning dividends and bonuses. So banks will find themselves losing their best people to other sectors, and anyone who has any cash left will be looking for dividends elsewhere.
Given the amount of money that goes through the markets each day, $250 billion looks a modest sum. Can it really stop the rot? It seems to me that you really can't buck the market. But you can use an awful lot of taxpayers' money trying.