LONDON BRIEFING:THERE'S A new high-stakes game that stressed-out bankers are playing these days. It's called Spot the Next Victim. Get it wrong, and you lose a load of cash, your job - and perhaps even the bank. Get it right and you live to fight another day.
Since Bear Stearns was mopped up by rival JP Morgan Chase last weekend, at a rock-bottom price of $2 a share, a new sense of mistrust has descended on financial markets. Rumours that one bank or the other is about to go belly-up have been racing through Wall Street and the City of London for months now, sparking wild downward spirals not only in banking shares but across the market.
Post-Bear Stearns, however, those rumours have reached fever pitch, with alarming consequences on individual stocks.
Thus, Halifax group HBOS lost more than 12 per cent of its value on Monday and, across the Atlantic, shares in US investment bank Lehman Brothers slumped by almost 40 per cent at one point. Lehman particularly has been the focus of intense speculation that it could be the next victim of the great credit crunch while in Europe fears have been growing over the position of UBS.
In fact, almost every bank has been subject to some sort of rumour as what is now being recognised as the most serious financial crisis since the Great Depression tightens its stranglehold on global markets. And, just as customers and investors don't know which banks to trust, the banks are becoming increasingly unwilling to trust each other. The end result is virtual paralysis in the money markets, with all the knock-on effects that entails for cash-strapped financial institutions.
Despite yesterday's recovery, the mood in London remains grim - as it does in New York, Tokyo and Frankfurt - and every other financial centre. The quarterly results from Goldman Sachs and Lehman Brothers yesterday may have been better than analysts feared, but they were still pretty awful. And there is a long way still to go before this crisis can be declared at its worst, let alone over.
In London's Canary Wharf, home to Bear Stearns and a host of other banks, tills at the posh shops that line the main square are ringing less frequently.
Not only is the axe hanging over Bear Stearns's 1,500 London staff, but perhaps as many as 10,000 jobs could go in the City of London this year as a result of the financial turmoil.
That is the stark forecast from the Centre for Economic and Business Research, although director Doug McWilliams believes total job cuts will still come in below the 40,000 lost in the last recession of the early 1990s and the 20,000 axed after the dotcom bubble busts of 2002.
For the optimists, that is good news. For the pessimists, it could merely be a sign that things could get a whole lot worse.
Revealing the way we live now
Data from the Office of National Statistics (ONS) doesn't always make for a riveting read but the office's 61st annual shake-up of the basket of goods it uses to calculate inflation provides a fascinating glimpse of the way we live now.
In deciding to include fruit smoothies and muffins for the first time, the ONS identifies what it calls a growing "cafe culture" in British society.
They are two of the new entrants to the list of 650 goods and services contained in the inflation basket, with other newcomers including peppers, small oranges such as mandarins and clementines, multi-packs of bottled lager, memory sticks and classic albums by U2, Pink Floyd and Madonna.
Ousted from the basket, which is revised once a year, are CD singles, TV repairs (we don't bother), washable carpets, 35mm camera film, and frozen vegetarian ready meals, sidelined to create more room for fresh produce. Microwave ovens have been booted out because most households already have one.
The inflation basket has been around since 1947. Key features of the first list, which was created just two years after the end of the war, were sewing machines, galvanised buckets, corned beef, wild rabbit, lamp oil, matches and table mangles.
In the 1950s, tastes became more sophisticated, with the inclusion of canned fruit and ice cream, televisions and cars. The swinging 60s brought sliced white bread into the basket, along with denim jeans and paper tissues while the 70s saw the introduction of yoghurt, duvets and home-perm kits. Frozen ready meals made their mark in the 80s, together with video recorders and CDs. The 90s brought in fees for aerobics classes, replica football strips and computer games, while out went flea collars, canned sardines and net curtains.
Fiona Walsh writes for the Guardian newspaper in London
