The figures are dry – the information, to the layman, even boring. “Lending to the private sector in the Eurozone shrank last month year on year for the first time ever” – even as the zone’s economy was returning to growth.

In other words, in common with Britain’s banks, Europe’s bankers have scaled back on making credit available at an unprecedented pace.

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Havana, Cuba seems an oddly appropriate place to be hearing the unsurprising renewed furore over bank bonuses in state-helped banks.

I’m holidaying here, but there’s much to remind of home.

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About two years ago I met one of the top British bankers and asked for an opinion on Brown/Darling vs Cameron/Osborne. I was shocked to hear his scepticism about the Tory business policy versus the government.

To be clear, this was Brown at his absolute peak, still ahead in the polls, just before Northern Rock and the missed election debacle. But there was an enduring concern from the top of this skyscraper that David Cameron’s efforts to rebrand the Conservatives away from nasty Big Business towards friendly Alaskan huskies had gone too far.

I ponder this after watching George Osborne’s fascinating joint appearance with Christine Lagarde, the French finance minister in the studio with Jon last night. Madame Lagarde is always great value. read more

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Size does matter to the G20 finance ministers. We know this in relation to the extent of the recovery. Some feel recovery has bedded down sufficiently to allow talk of ‘exit strategies’ from the extraordinary stimulus seen around the world.

Others, including the chancellor, fear that “the biggest single risk to recovery is that people think the job is done“.

We also know that quantum matters in relation to our banks, because almost a year ago in Washington, an unprecedented meeting of 20 world leaders decided that 30 of the world’s largest financial institutions would not be allowed to fail. read more

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‘Grow your own veg’ is an oddly resonant message in uncertain economic times.

I heard it first from my father, when he sent his youngest three children to help him tend to his Manchester Council allotment at Bradley Folds next to the River Mersey.

Now I’d rather have been tending to a football than fetching manure, but there is something utterly wondrous about eating a meal from your own organically nurtured crops. And now it seems, my parents may well have been far more visionary than a sulky kid may have appreciated in 1980s south Manchester. read more

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Rising out of the carnage of the credit storm is the new gleaming headquarters of the titan of post crisis American banking. Goldman Sachs has emerged richer and more powerful than ever, but the Goldman glow is being replaced by a Goldman glare.

It has without doubt been the most significant shift I have noticed in my month in the US. The vitriol piled on Wall Street’s elite financial institute was strong, even before it announced remarkable second quarter results. read more

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So I was in the East Room of the White House for what appears to have been a minor moment of US domestic history..

I was about five metres away from the president when he said that the Cambridge police ‘acted stupidly’ having mused on healthcare economics for an hour.

This is what I, as stand-in DC correspondent and economics-not-politics specialist, have learnt from what President Obama himself calls a ‘teachable moment’.

1. President Obama jumped the gun on the ’stupid’ comment. To be clear though, his first comments were heavily caveated, and conditional.

He said that these sorts of arrests can be seen through the prism of police mistreatment of young African-American and Latino men, even when there is no racial issue. That is clearly true. It is true in Britain too.

Even if you believe it is justified to use racial profiling for Section 44 stop and searches under the Terrorism Act, that is clearly going to create a rational reaction from say, any young Asian man, to avoid the police outside train stations.

2. There are substantial racial undercurrents still whirring around America in regard to the president. There is a silent anger in ‘Palinamerica’ that is susceptible to frankly ludicrous arguments that see the president’s plan for universal healthcare as a backdoor attempt to, for example, gain reparations for slavery

Ironically poor rural white America probably has an awful lot to gain from healthcare reform. President Obama is hemmed in by these wild attacks from the right, in a way that President Bush would never have felt constrained by the left.

Will Obama choose to take these people on? If he waits he might find himself without majorities in Congress and unable to realise much substance from his message of ‘change’. (Oh, and 225 who got over $5 million, and 37 who scored above $10m, and that’s excluding JPMorgan).

3. The longer the recession goes on, the greater the danger for President Obama of achieving little. He was elected on the coat-tails of a collapsing financial system. So far the most tangible beneficiaries of the bailouts that he supported or enacted appear to be 3,167 bankers in government backed banks who gained million dollar bonuses (oh, and 225 who got over $5 million, and 37 who scored above $10m, and that’s excluding JPMorgan).

The anger about this brewing. Small wonder that today the president was gripping on to better-than- expected GDP numbers that showed a recession that is easing, but that the economic hand he inherited was even worse than thought.

Naturally, the president says this alleviation of the downturn is ‘measurably attributable’ to the Recovery Act of stimulated spending. They have ‘put the breaks on recession’, he said today. Yet economists say the economy needs to be growing by three per cent a year until the jobs market turns the corner. That seems a long way off.

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There are many men in dark glasses in Washington DC during the summer. Amongst the most feared have been the International Monetary Fund economists who fly around the world reviewing the policies of individual countries – so-called Article IV Consultations.

Such a team has been in the UK over the past weeks and a few moments ago I heard them issue the single most important external report on the UK economy from their headquarters in Washington DC. In it the IMF staff project that gross government debt could reach 100 per cent of GDP by 2014/2015 or 87 per cent on the net debt measure.

Britain seems to be being advised to engage in the sort of ‘Structural Adjustment’ of borrowing policies that the IMF used to force upon bankrupt developing countries. The IMF want the UK to come up with ’specific measures’ – ie the detail of spending cuts.
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Out and about with the Prime Minister on his round-England trip today and you are very struck, listening to him addressing a business breakfast this morning in Leeds, by a sense of economic optimism.

Not just a sense that the Budget growth predictions could be right but that they could be exceeded.

That would mean sustained growth on a level not seen since the dotcom bubble or the Lawson boom – to pluck two ominous precedents from history. read more

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