The label ‘credit crunch’ which is being used to refer to the ongoing global financial upheaval does not tell the whole story. Still developing the story would perhaps take much longer to make any sense.

And until that happens all the projections about how long it would take for the world economy to return to its ‘normal’ activity and what shape it would finally take seem mere speculations.

More so because these projections are being made by those very on-job- economists and media ‘experts’ who had been cheering up the big business the world over all the way from boom to doom over the last three decades.

Some one was quoted as saying that good manners and good tailoring should never be confused for integrity and honesty. But most of those who led the world into this deep hole like Mr Madoff who made off with as much as $50 billion of other peoples money were all well mannered and smartly turned out, sporting fast cars and luxury yatchs, schooled in the best of world’s institutions like the MIT, Harvard and Yale and oozing integrity from every pore of their investment bankers’ being.

The speculation is that the real economy would come into its ‘real self’ by 2010 and that would be what is believed to be ‘all is well that ends well.’

But there are still many a slip between the cup and lip. The oil prices are down to around $40 a barrel because the demand has gone down steeply as a result of slow down in the real economy.

But part of the reason for the worldwide recession is that oil at $140 a barrel had priced itself out of the reach of the real economy. So, when the bankers finally decide to get out of their wait-and-see mould and start opening their vaults, oil prices are once again likely to start rising and the market makers would once again start adding their speculative component to this price pushing it up perhaps to near $200 a barrel and ending up once again taking the commodity out of the reach of the real economy. So, the oil market needs to be regulated in a manner that it does not once again fall in the hands of the speculators.

But before this can happen, the bankers have to get out of their cocoons. And there is no sign that they would do that any time soon. Most have been either completely or partly nationalised. The governments which have poured billions of tax payers resources into the bank vaults to save them from going under are looking closely at various regulatory rules to tighten them so as to make it impossible for the banks to do with the taxpayers resources what they did with their depositors money. But the bankers appear in no mood to let any regulation come in the way of their ‘free market’ practices which is what they have been using all these three decades of banking bonanza. They do not know any better.

So, a tug –of-war between the banks and the national governments on the issue of regulation is on the cards. This, it is speculated, could force the hands of the government and could lead to massive nationalisation of banks.

According to the latest Economist weekly (December 30, 2008) state-backed recapitalisation in the US and Europe has already in effect nationalised some banks. The US Treasury’s $50 billion (euro 36bn, £34bn) of preferred stock in Citigroup exceeds its market value. The British government owns 58 per cent of Royal Bank of Scotland. If bad debts prove to be more severe than expected, more banks will need another dose of capital, with governments as the only providers.

But extra capital will not, in itself, stimulate lending unless governments simultaneously take steps to restart the wholesale lending markets. For now, governments insist state ownership will be temporary and that banks will be managed at arm’s length until they can be returned to the private sector.

Unless politicians want to force banks to extend credit to unworthy borrowers, that will probably remain the case. But the crisis has revealed the extent to which taxpayers are the guarantors of the financial system. In future, they will demand a greater say in how their banks are run.

The real contest for turf here is between the big business and the elected politicians who govern nation states. So far the big business has had the better of these politicians. Now the politicians are pushing back with stricter regulatory mechanisms which if firmly applied, the big business fears, would amount to socialising the market. So, they are pushing back too.

Let us leave the bankers for a while and look at what the governments are doing to take their countries out of the deepening recession. Britain has taken the lead in this regard deciding to spend its way out of the recession and most of the rich and not- so- rich countries have followed suit.

But Prime Minister Gordon Brown’s attempts to spend his way out are taking a heavy toll on the sterling. The more he borrows for his spending plans aiming to reverse the deepening recession, the more the pound is coming under pressure. Now there is open talk of the euro achieving parity with the pound in the coming weeks.

The plummeting pound does not seem to have helped exports because the real economy is chugging to a standstill producing less and less of exportable surpluses.

The tourist trade led by shoppers from Europe and the US is expected to get an extra fillip because lowering pound and increased high street shopping in the summer is expected to expand demand which, in the first flush, is likely to send prices skyrocketing making the life of British consumers earning declining pound extra difficult.

Meanwhile, Britain’s biggest union, Unite, is calling for reining in the big business by demanding a crackdown on tax havens, which it claims rob the Treasury of £33 billion a year.

As Britain faces a bleak new year with public finances under increasing strain, Unite is urging Prime Minister Gordon Brown to make the “culprits” of the credit crunch pay their fair share of tax.

The union cites figures published by analysts Tax Research UK, which suggest that Britain’s top companies avoid paying £25 billion in tax a year through the use of tax havens. In addition, a conservative estimate suggests that wealthy individuals - those earning over £200,000 a year - avoid a further £8 billion in tax.

The union is calling on the government to force financial institutions to close down their structured finance operations, repatriate offshore profits and make them subject to UK tax, and close down private banking advice departments that help to exploit tax loopholes.Clawing back just one year’s tax would have been enough to pay for the government’s £20 billion fiscal stimulus package, the union noted.