It would seem that the political consensus is that only further regulation can save us form the savage beast that is laying to waste the financial markets.  I think at best it is likely that politicians will end quixotically tilting at yesterdays monsters to no real effect, the beast will have moved on; at worst, however, they will sow the seeds for the next financial crises, be it in 5 or 50 years.

Some Stateside commentators, in fact, believe that our problems are down to too much regulation.

For example, Fannie and Freddie were borne out of the depression of the 1930.  Their remit was to ensure easy credit to Main Street America to promote and foster a property owning democracy.   What they morphed into, over time, was a state backed cuckoo sat in the middle of the mortgage market sucking in trillions of dollars of funds, but more importantly all of the decent customers.  The only rational response of the banks was to chase the higher returns “offered” by poorer credit rated customers.  Stir in a bit of well meaning legislation into the pot, courtesy of Bill Clinton, to ensure that banks couldn’t turn down customers for fear of being branded racist, bake it for eight years and you have big slice of Sub Prime Pie.

You would have thought that three quarters of century of a command economy would mean that the Russians could do regulation a bit better.  However once again, the seemingly sensible regulations put in place to prevent oligarchs from taking assets out of the country, have had disastrous and unforeseen consequences.

Not able to take cash out of the country to fund acquisitions that ranged from Chelsea FC, Candy & Candy flats to Courchevel and Iceland, they instead borrowed from Western banks secured against their rouble denominated equities.  The credit crunch, assisted by a less than prudent invasion of a small neighbour, led to a dramatic fall in their value, margin calls to meet the western loans, fires sales, a run on the currency, further falls in value…….

The Russians will now blow their currency reserves, effectively re-nationalising the economy and will end up with a politico-economic structure resembling National Socialism. Nice.

I could go on, but it would appear that unexpected consequence of the Credit Crunch has been to turn a left wing leaning, champagne socialist, like me, into a raging right-wing economic Neo-Con.  Not Nice.

It would appear that most people are now back and like truffle pigs are digging around in the mire looking for green shoots of recovery.

I am doing my bit; sprinkling Prozac on my Cheerios every morning and only reading Anatole Kaletsky’s column in The Times helps.  I also try to go by the maxim of “If you can’t say anything nice don’t say anything at all”; mother would be so proud.

In fact to paraphrase Churchill, I was staring to feel that we had reached the end of the beginning; the optimist in me was hoping that we could start talking about the “Post Credit Crunch” world due to Mr “Hank” Paulson’s generosity at the weekend.

Unfortunatley my panglosian view, however, has been undermined by the slow motion accident that is Lehman Bros.

Not only is this a shame, in that it only serves to undermine fragile confidence that was building, but we know a lot of good people there and it can’t be much fun.

I can’t believe that Lehman’s, per say, are markedly any worse than many other investment banks. 

The financial markets seem to be operating within a playground mentality: a gang of kids will always pick on the weediest one, because at least it’s not them recieving a wedgy.

Now they have succeeded in destroying the Lehman’s franchise, who’s next?

In a recent article (FT 29/7/08), Gideon Rackman, argued that clichés are in effect truisms, based upon the received wisdom of crowds; or to put it another way, you are more likely to get the right answer asking the audience than phoning a friend.

On this basis if I write a blog full of clichés, it is bound to be more accurate than one without them, so here goes:

On the 9^th August we reached the tipping point of the Credit Crunch when BNP Paribas effectively declared that two of their hedge funds were sicker than a dead parrot.

A year on we would appear to be in a perfect storm, but how did we get here? Are we at the beginning of the end of our troubles yet, or merely the end of the beginning?

By Autumn it was clear that the good ship Great Returns From property was holed below the water line and retail investors, always late to the party, rushed for the life rafts of this rapidly sinking ship.

By December brave investors had stepped up to the plate to buy from the funds who were forced to sell, but by January it was clear that they had caught a falling knife and the market in New Year was flatter than a dead cat bounce.

Buying investments based on last years’ values is clearly like driving only using your rear view mirror.

Any hopes of a resurrection following Easter, where dashed when the green shoots of recovery, being nurtured by the agent community, were left withered in the ground by cold blast of Arctic realism blowing into MIPIM with the banking community.

The collapse of Bear Sterns shortly thereafter showed that no one was too big to fail.

Through early summer until now a Mexican Standoff has continued, with sellers either not able or willing to put their heads above the parapet, to be shot at by the big guns of the opportunity funds.

The elephant in the room is of course the question how the banks will react, now there appears to be no relief in sight (not even in September).

Dawnay Day has shown that it’s not always the banks problem if you owe them £2bn.

Come the autumn we’ll be ready and willing to run a few ideas up the flagpole to see who salutes, but for the time being we’re happy to wait for blood on the streets.