The preview of the Queen’s Speech flagged a scheme to provide £200m for buying new homes and renting them out. The government may now be spending money like it is water, but luckily that sum is peanuts in terms of the housing market. It will probably purchase fewer than 1,000 homes – though that should be welcomed by a beleaguered house building sector.

Nevertheless, it makes no sense to waste even £2m buying assets that are falling in value. The state needs to negotiate a massive discount before such a move makes sense.

More worrying is the associated planned extension of the shared-equity scheme, currently available to key workers but now to be offered to all first-time buyers earning under £60,000. With prices falling fast – down 5 per cent in six months according to Nationwide and Halifax – and little hope of short-term recovery, why is the government putting more of our money into this market and why is it encouraging up to 75,000 buyers (its figure) to invest money they will lose?

The finance director who buys back the company’s shares at £10 then finds he can buy then them at £9 and £8 initially feels smug that he is now getting a better bargain for his good idea. As the market price falls to £7 and £6 shareholders start asking why he paid so much for the early shares. By the time the price is £5 or less it is usually reflecting the fact that there is no money left to continue buying. After that, the finance director tends to be fired and his successor issues new shares at £3 to rebuild the balance sheet.

The government finance directors will initially be pleased their money goes further in the housing market than originally thought. They will then face write-downs because they have overpaid. In time a new government will sell these state-owned houses as though it had discovered a new source of funds.

His predecessor at the Treasury - now the prime minister - cut the basic rate of income tax to 20p and abolished the 10p band, but when it took effect in April 2008 the government received all the flack for the abolition leaving 5m people worse off but received no thanks for giving everyone else the lowest tax rate for 75 years. In expressing their opinion of the tax move, even the majority that gained financially allied themselves with the minority that lost.

There should have been a lesson there that applies to change of all sorts, from re-arranging the office furniture to rebranding products: that the appreciation of the positive is outweighed by the disappointment at the losses.

Now to appease the tax losers - or 4m of them - Darling has given a tax cut to 22m people. That ought to be an occassion for rejoicing but the effect is lost in the politics of why the hand-out has been made. When people have to pay an extra £120 tax that is an enormous sum; when they receive it as a tax cut it is regarded as measly. If the one-off cuts are restored next year there will be howls: expect more climbdowns as they are extended, therefore.

It is because the downside always seems larger than the upside that politicians should resist change. Instead of winning votes, the cash hand-out has lost the electorate’s support.

To borrow to give a tax cut is economic madness but there are redeeming points. Chaning the tax allowances is better than mucking about with the minimum wage to compensate the 10p losers, which was the previous month’s idea. Debt is not ideal but it is not disasteerous either, and by asking higher-rate taxpayers (who gain nothing from the tax changes) to help repay it, Darling is unintentionally redistributing income.

And the £2.7bn being borrowed will boost the economy. The US government has just handed out a tax cut to boost its economy and Darling might just justify his tax reduction on that basis (though it might mean admitting the UK is near to recession). Instead it is a fudge to cover up the previous fudge. It is a bungle rather than a bung - and it is not the way to run a nation’s finances.

The more successful the private providers become, the weaker Royal Mail will be. But this is not a classic model of splitting market share: these new rivals to the state monopoly are not only competitors of Royal Mail, they are its customers too.

The newcomers collect post and sort it but they hand it to the government-owned mail business to deliver to customers’ doors. Gaining market share and shrinking the Royal Mail business further thus puts the private companies’ own business at risk too. Delivery depends considerably on critical mass to give economies of scale, but without the state organisation to deliver the post, UK Mail and TNT, part off the Dutch post office, have no business.

A reliable postal service is essential for business and the private operators have picked up so much market share because of dissatisfaction with the state supplier. But Royal Mail has already declared a loss on its letter deliveries that is set to get bigger. It is in a market that is shrinking but which is being further eroded by these private suppliers that pay it money.

Repealling the legisalation that brought competition to the postal market is no answer: it would protect Royal Mail in the medium term but encourage its inherent inefficiency. Allowing innovation that reversed the fall in the postal market might allow it to return to profit while suffering competitors - but there has been little sign off that so far. Forcing the upstart rivals to deliver their own post would make them realise the costs involved in providing the “last mile” - but splitting this leg of the business would ruin the economies of scale from a monopoly deliverer.

The answer is to split delivery from the Royal Mail’s other functions - either by ownership or strict separate management. BT’s Openreach - the subsidary that provides phone facilities for both the parent and rivals - is the precedent. The delivery function would thus serve both Royal Mail and the private providers and ensure business had a real choice for its postal services. Perhaps TNT and UK Mail might even invest in this new delivery organisation?

Microsoft is appealing against the record €899m fine imposed in February for alleged anti-competitive practices. That was on top of €497m penalty imposed in 2004 and the €281m that followed two years later.

As a big American company, Microsoft can pay Europe’s fines, but the European Commission ought to realise that its target is big because it is successful. Instead it thinks that success gives it an unfair advantage over competitors. It thus insists that Microsoft should share its success with less efficient or innovative rivals by giving them access to the Windows software Microsoft developed.

The latest fine was because, having allowed it to offer this access on reasonable terms, the EC considered the terms unreasonable.

So far this spat has lasted a decade and with another investigation launched by the Commission this year into Microsoft’s Office software, it could last several more years. But there is an important principle at stake here – the right of an innovative company to benefit from its own initiative.

If a company – whether a drugs business or a supermarket – is to have the fruits of its own efforts taken away simply because it is successful, why bother trying to get ahead?

If Europe wants Microsoft it must be prepared to buy its services on the Americans’ terms. The truth is that Europe needs companies like this and fining them for being more successful than European companies risks killing the goose that lays the golden eggs.

While Britain historically measures the strength of its currency against the US currency, our trade is with our European neighbours so we are net losers from this foreign exchange imbalance but it is one that will surely start to turn.

The weak dollar reflects the weak US economy. America certainly is in trouble, but while things there are bad, they are not disastrous. Certainly not by the standards of past recessions. And while European economies are stronger, they are rapidly slowing down.

The exchange rate should thus not be comparing terrible US prospects with a perfect European outlook but balancing two deteriorating economies. On that basis, the dollar is oversold and the euro overvalued.

But while transatlantic trade is modest compared with business within the two continents, much European trade is denominated in dollars. In particular, the weak US currency has protected Europe from the full effects of the rising price of oil. That cushion will end when the dollar regains its strength.

It will please certain governments, however, principally China, that have funded the US balance of payments deficit by investing the proceeds of their export sales back in a dollar that has steadily devalued.

If the US authorities seem to be showing little concern at their undervalued currency that may be because of the long political impasse ahead of November’s election but the fear of imported inflation may bring the exchange rate onto the domestic agenda. The interest rate cuts aimed at boosting the US economy have weakened the dollar’s international value.

For Europe, the euro makes exchange rates an irrelevancy for trade within the zone but Britain is caught as the fulcrum of this currency seesaw. The strength against the dollar is of limited value to us while the pound’s weakness against the euro is making imports more expensive. When the re-alignment comes, Britain will benefit from a decline in the dollar only if it is accompanied by the pound strengthening against the euro.

The former Lord Chief Justice was asked to produce his report because BAE’s critics think gifts are a synonym for bribes.

The company already produces a corporate social responsibly report that uses up several forests to explain how green it is: now it seems it is to add a volume explaining the ethics of arms dealing. No matter that the OECD, US department of justice and even the UK government say corruption is illegal and BAE has constantly denied crossing the line, Woolf thinks this has to be spelt out.

A cynic might see this as a PR exercise that is a response to the SFO’s investigation in Britain – hastily terminated by the UK government when it got too hot – plus investigations in six other countries. BAE management commissioned the report, accepted it, admitted that perhaps it could have done better in the past, and then sought a further review of the outstanding allegations.

BP sought a similar external review of its activities after the Texas refinery fire and went through its mea culpers while the heavy hand of the law looked for its own remedies. The mining industry is not beyond pre-empting criticism with its own environmental reports.

The test will be to see if Woolf’s report is ever heard of again or left to gather dust on the shelf. The register of gifts given is for internal purposes only – not external inspection.

The danger is that ethics become the new green, with companies competing to be cleaner than each other. If those companies with nothing to hide start telling their shareholders how ethical they are, the others may be blackmailed into following. Disclosure may also be the excuse for curtailing corporate hospitality.

This is not so much a circular argument as a self-correcting mechanism, like the governor on a steam engine. Oil prices rise, economies slow, the demand for oil falls and the price of the commodity deceases accordingly.

We have seen this pattern plenty of times before. A decade ago, as economies recovered from ther 1990s recession, oil was just one-tenth of today’s price.

Supply is part of the equation as well as demand, of course, and Opec producers have frequently sought to reduce output to maintain prices when demand is weak: they may yet try it again, but for the moment, demand is the stronger part of the formula.

If anything is different this time it is so-called disconnectivety. In previous cycles, when one major economy headed for recession it took others with it. When America sneezed, other countries caught the cold.

The fashion of recent years, however, has been to tell us that some countries - principally China and other parts of Asia - are disconnected from the Western nexus. The theory is that the G7 countries can experience economic slowdown while some other regions continue to boom.

This is the time to test the theory. Can China prosper without exports to Europe and the US? Given its growing domestic consumer base, it probably can. Can India avoid being depressed by the West? Perhaps.

But if they can, there will be demand for oil from that quarter of the world while demand in Western economies falls. That would mean prices remaining high while the USA heads for recession and other developed countries’ economies slow. The self-correcting mechanism would thus have failed, with the risk that oil prices make a recession even worse.

Bank of England governor Mervyn King could have borrowed those words from Winston Churchill – delivered at the Mansion House, just opposite the Bank, in 1942 – for his latest stability report. He did not exactly sound the all-clear on the credit crunch but he has suggested the worst is over.

The crunch started on 9 August 2007, but while its origin can be dated precisely, it is unlikely the end will be so easily identified. The end of the 1992 recession can be timed to Black Wednesday, 16 September, but we are unlikely to have so exact a conclusion to this crisis. Different sectors will emerge from the crunch at different times.

King may be right in saying risk is now overpriced but it will take more than his optimistic comments to move the markets. Markets always overshoot, going too high in booms and too low in slumps. After the past years’ underpricing of risk it is natural that too much weight is now being applied to it, but it will not end overnight.

And just as asset prices, particularly property, were overpriced in the boom it will take a period of underpricing before the curve turns upwards again - and that period has a long way to run yet.

King’s comments – perhaps like Churchill’s – seem designed to boost confidence when there are few other reasons for it rising. It takes more than that though, and King’s financial analysis, perhaps mathematically correct in its risk assessment, is in danger of being overtaken by downturn in the wider economy before the upturn in the financial sector happens.

Even if the banks can write-back some of their financial losses they will be forced to make provisions as businesses outside the City fail. King’s pep talk is insufficient to stop the economy going through a prolonged slowdown. He should remember that the war raged for another three years after Churchill’s speech – and that the austerity lasted another decade.

The drip of British businesses re-registering abroad, especially to Dublin, is turning into a steady stream and the more that go, the more acceptable and the easier it is for others to follow. United Business Media and Shire are showing that the brass plaque can be moved offshore while leaving the business and management exactly where it always has been.

The Chancellor may think he is being blackmailed into concessions, but that’s how it works. When gaming companies moved to tax havens such as Gibraltar the Treasury’s only answer was to attract them back by cutting UK taxes on the basis that a reduced tax income is better than none. The shipping industry won its concessions after starting to re-register abroad.

Now companies have proved they can be just as mobile, moving their tax base while benefiting from London share listings and the other advantages of Britain.

If the Treasury tries to increase other corporate taxes to replace this lost income it risks turning the stream of defections into a torrent. Increasingly, tax will be concentrated on immobile bases such as property and consumers.

But if the UK cannot yet match the low corporation tax rates available abroad, the Treasury can act quickly to reduce the uncertainty over the tax of UK companies’ overseas earnings. The review currently being undertaken should be forced to report as early as possible – and it should avoid any changes that risk sending more companies abroad.

The hastily convened task force to advise the chancellor should tell him to stop tampering with the system, remove all uncertainties and hold out the hope of lower UK tax bills.

Ministers started by wanting to cut the 22p income tax rate. Abolishing the 10p band was the spider to deal with that. Now it is considering invoking a bird in the form of the minimum wage. At some point it must realise that each solution is worse than the problem it is designed to overcome.

The obvious flaw in using the minimum wage to help compensate some of the 5.2m people who lose from the abolition of the lowest tax rate is that it is a crude solution: not all low earners are wage earners, nevermind earning below the minimum hourly rate. There would still be losers.

But the bigger objection should be that this is not the government’s money to give away. Wages are paid by employers, mainly private companies. Ordering them to fill the hole dug by the state is fundamentally unfair.

Using the minimum wage to cut off the political rebellion over the tax band is a desperate move but it is wrong in both practice and principle. Not only is it wrong to push up business’s costs, it makes the minimum rate a political tool rather than a market incentive.

This year, for the first time since it was introduced in 1999, the minimum wage is being increased by less than the retail prices index, thus increasing the incentive for workers to get off the state-set wage and earn a better rate. Artificially raising the minimum to avoid political embarrassment undoes that welcome trend.

But if the chancellor plans to introduce some new incentive for business to compensate firms for their higher wage bill, that would be worse still. More bad decisions do not make the earlier ones any better. In the end the old woman in the rhyme swallowed a horse - and she died.