Banks are rarely in the news as much as they are now. There are yet more writedowns from the giants of banking in their end of year reports.

Will that be the end of it? Probably not, but at least a fightback is underway by the bulls, while the bears seem to be temporarily in retreat.

With Ben Bernanke last week promising to cut rates with a scythe instead of the usual nail scissors, America will avoid a real slump and the world will move on.

Anatole Kaletsky in his Economic View column in the Times (London) thinks the U.S. may well avoid a serious recession (two quarters of negative growth) and prognosticates as follows for Britain and Europe :

By the second half of 2008, however, the euro will take over from the pound as the pariah of the global currency markets, since the eurozone will ultimately suffer more than Britain from the slowdown in the global economy because the European Central Bank will resist making the inevitable interest-rate cuts. This intransigence by the ECB will cause serious economic and political disruptions in Europe – and could even raise questions about the euro’s survival as a reserve currency in the long term.

The landscape will be changed though. The behaviour of the banks in recent years has been beyond any pale we might wish to contemplate in a nightmare, but then that’s not exactly new. Who said this, for example? :

“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a grand scale.”

That was Thomas Jefferson in 1816.

Plus ca change …

Update : Citigroup has just posted a near $20billion writeoff for Q4 2007. These are spectacular numbers which highlight the immense financial transfer from the West to the Far East that’s now underway thanks to the greed and stupidity of our bankers.