The US Federal Reserve’s three-quarter point interest rate cut was put down to a mistaken reaction to stock markets disturbed by Societe Generale unwinding its rogue trader’s derivatives; the half-point cut a week later is genuine panic. The Fed is baling fast because it knows the economy is sinking.

If the first of those cuts really had been based on the false signals from France then the second cut wouldn’t have been necessary. That the Fed did cut again shows it thinks it knows something that others only fear.

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Of the many ways for a business to lose money, derivatives remain the best. It is a tried and tested method, as pubs group Mitchell & Butlers can testify after writing off £264m. It is not on the scale of Societe Generale’s £3.7bn loss on derivatives, of course, but it was lost just as easily – and with full board approval rather than relying on a rogue trader.

Futures, options, hedges and swaps are supposed to reduce risk but with appalling regulatory, ordinary businesses find themselves on the wrong side of the deal and losing on a single decision more money than their trading operations make in a year.

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OK, there’s an extra zero on the end of Societe Generale’s loss, but what is the difference between the bet made by Jerome Kerviel and the gamble by BSkyB’s James Murdoch in buying 17.9 per cent of ITV? The share stake’s value has fallen by £440m and the UK government has now ordered Sky to realise most of that loss by reducing its stake below 7.5 per cent.

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Any finance director whose nightmare is that a young employee blows the value of the company like Societe Generale’s rogue trader will sooner or later think through the double-entry bookkeeping implications. The French bank has lost £3.7bn, but Jérôme Kerviel has not gained by that sum.

The trader may be accused of fraud, but my dictionary defines fraud as a “deliberate deception, trickery or cheating intended to gain an advantage”. But there is no suggestion M Kerviel sought any gain except, perhaps, kudos. His act is more akin to vandalism than theft: he has destroyed value rather than appropriated it.

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Since last August proper businesses have looked disdainfully at the banking sector with a superior smugness that blames the bankers for bringing their problems on their own heads. But now it is becoming clear the financiers’ troubles are everyone’s problems. When a financial crisis develops into an economic crisis it becomes a business crisis.

Initially, businesses – as opposed to banks – felt aloof because they were still making money when the bankers’ cash had run out. They could now make bids without being beaten by private-equity funds using borrowed money. Their shares remained high while the banks’ equity crashed.

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Slashing US interest rates is a short-term fix for America’s economy – and thus possibly for the world’s finances – but it is a solution that resorts to the problems that created this mess.

The last time the Fed made an unscheduled cut in interest rates was immediately after 9/11, and though done with the best intentions, it started the low-cost credit regime on which the world became dependent.

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Stop worrying whether the world is going into recession: start worrying that we could be there now. Delays in the system mean it could be 10 months or more before official figures tell us the trouble we are in now.

The official definition of recession is two consecutive quarters of negative growth. So a sector could be slowing down in January, go into reverse in February and turn worse in March but still have a positive overall figure for the first quarter. The second quarter could be sliding deep into negative growth and stay there for the July-September quarter but the figures would not emerge until October or November – telling us at the end of the year that there has been a recession since the start.

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In the never-ending Northern Rock saga, something seems to have been forgotten. There is so much confusion about which way we should save the bank we have overlooked that rescue was never an objective.

It was never the Government’s intention to save Northern Rock. The reason the state intervened in September was to save the financial system.

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Amid all the turmoil in financial markets, something big is happening to the banking system. It is being taken over. Rich governments on the other side of the world are buying stakes in the West’s banks. Citi, Merrill Lynch, Morgan Stanley and Bear Stearns are all now partly owned by government agencies ranging from oil-rich Arab states to Communist Chinese banks or Singapore government investment funds.

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Monaco for tax exiles, the British Virgin Islands for incorporating companies, Liberia for registering ships – and London for share listings. The UK stock market is top of the list for foreign companies that do not want to list their shares in their home countries but it is reducing the City to the same level as those tax havens and places where few questions are asked.

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