And there is an acceptance that we will have to pick up the tab for this spree when the “good times” return. There are certain parallels with the necessary deprivations of wartime and the austerity years that will have to follow when the peace is won.

But who will ultimately pay for the spree? In simple terms, a government can tax people, tax business or hope something turns up. The latter is not impossible: North Sea oil and G3 mobile-phone licences have provided UK public finances with an unexpected bonus in the past but, although the state now owns a large tranche of the banking system, it would be irresponsible to bank of another such windfall.

Which leaves companies or consumers, and business should be worried in case it is hit directly with higher taxes rather than indirectly through its customers being taxed.

Higher corporate taxes are only likely to encourage more big companies to go offshore to avoid payment. That puts a greater burden on those firms too small or too loyal to move their corporate base. A hint on whether the borrowing will be repaid by small or large companies would be useful in the Pre-Budget Report.

But a hint on whether it will be rich or poor consumers would be useful too. Taxing the poor has obvious practical problems: it is easier to tax those with money. But this suggests the borrowing spree is likely to lead to a major redistribution of income in which smaller companies and richer people suffer most.

Who repays the debt ought to be the key difference between the political parties at the next election. But an indication that the government has a plan for who repays ought to be included in the Pre-Budget Report.

And the formula works as dramatically in the opposite direction – as any property owner knows. That’s why even a 10 per cent fall in asset values will leave many highly-borrowed owners in negative equity, never mind a 25 per cent fall.

The fast elimination of equity will apply to the highly-geared private equity purchases of businesses in recent years too. Debt that should have stayed static while the enterprise value rose because of increasing sales and profits will become overwhelming in many cases.

But low or negative inflation has repercussions for businesses of all ownerships. Yes, input costs should fall (though the lower pound will temper those reductions) but the companies’ own sales prices will have to be cut to stimulate demand during recession. And some costs – like rents, business rates and wage rates – cannot easily be cut, putting a disproportionate squeeze on margins.

Companies that rely on an increasing turnover for the working capital to finance current costs will be hit when income is hit by both lower volumes and lower unit prices.

And as already cautious consumers realise that falling prices mean they can get better deals by waiting, they will defer purchases – sometimes temporarily, sometimes for ever.

The winners from disinflation are savers, even though the interest paid on savings is falling. A pound saved now will have greater purchasing power when it is eventually withdrawn – plus whatever interest is paid.

And the other side of that coin is that the losers from disinflation are borrowers. Besides the interest paid, a pound borrowed now must be repaid with a pound that is more valuable in the future.

Past governments that borrowed heavily have been rescued by high inflation eroding the value of the debt. This government is borrowing at record levels at a time when money is likely to gain in value. No wonder the government is worried: it will be the biggest loser.

It is a bad message from the big pension funds and insurance companies if they think pre-emption applies only to them.

The fact is that Barclays, in its haste to avoid accepting government money, has botched its capital raising and there is no easy way to rectify its error. Independence from the state has a value but the bank’s price is too high -  yet undoing the deal would be even more expensive.

If existing shareholders vote down the issue because of their exclusion they risk forcing Barclays to accept even more onerous terms from the government – if not bringing down the bank.

The bank’s concession is to have persuaded the Gulf investors to offer part of their proposed stake to institutions – though a pretty small part. What price if any the Gulf investors have extracted for that clawback has yet to emerge, but there was a  £300m cashback for agreeing to take the shares originally.

To show their contrition, Barclays’ executive directors will forgo their bonuses – though there are only four executives on the board.

And the whole board will stand for re-election next April. But even if the affair is not forgotten by then, no shareholder would dare remove a whole bank board and, as the Emirate investors will still have almost 30 per cent of the bank, directors can rest assured they will be re-elected.

The bank – and existing shareholders – will nevertheless be lumbered with paying 14 per cent until 2019 on the £3bn of Reserve Capital Instruments it is offering. There are also warrants to buy new shares at 198p too – though the furore over the issue means those are still out of the money.

Another £4.3bn of convertible notes – still not on offer to existing shareholders – will pay 9.75 per cent until they convert next summer at 153p a share.

The institutions were right to be miffed at being excluded but they should have stuck up for the small shareholders too – just as Barclays should have included them. They have a common interest in pre-emption – and private investors would welcome a long-term 14 per cent return.

Now though the Bank, not government, sets rates and its only objective is to control inflation; there is no remit about stabilising sterling.

In the days of fixed exchange rates, keeping the pound within its limits was the country’s main economic problem. We spent millions – and in later years, billions – of reserves to hold the rate.

Sometimes the battle was lost and the pound was devalued, setting a new line in the sand to defend. In calmer days, chancellor Nigel Lawson secretly tied the pound to the deutschesmark by using interest rates ands reserves. That allowed Britain to join the European Exchange Rate Mechanism when the same tools were subtlety used to maintain the conversion rate until Black Wednesday saw the Bank and Treasury spend billions of reserves on buying pounds before the battle was lost.

The subsequent free floating pound has apparently required little support as the currency moved gently against dollar and euro, strengthening for much of that time. But it is now falling sharply against both of those major currencies – even without Osborne exacerbating the decline – and no-one appears to be in charge of stopping the fall.

Did the Bank think of the currency consequences before its steep cut in interest rates in November 2008? Are reserves being used to support sterling? Is there a political policy on the correct level for the pound? Who knows?

My guess is that the government is quite happy for the pound to fall, and if it is not engineering the decline it is not halting it either. Business is not complaining because it helps exporters. The Bank - which would have at least appreciated the effect on sterling even if it is outside its brief - is unconcerned that the fall will raise prices because its current worry is that inflation will be below target, not above. And if the public decides foreign  holidays are now too expensive, perhaps they will use their money to reflate the UK economy.

But because we think a “weak” pound is a bad thing, ministers will not admit they like the fall.

Osborne was asking for trouble by inviting accusations of making it weaker.

And when Britain benefits from the lower exchange rate he will be unable to take credit for it because he criticised the government for allowing fall.

However, it would be interesting to know what the government policy on the pound is and who is in charge of delivering it – and thus who to blame when the target is missed.

And the solution to a problem caused by high debt is more debt. Government has pledged £500bn to save the banks, some of that in equity. It is now going to borrow to allow higher state spending and lower taxation in the hope we spend too. And it will need to borrow to replace taxes such as stamp duty, capital gains and on bank profits – even VAT – that dry up during a recession.

It may succeed in keeping the economy ticking over but this debt must ultimately be paid for, and that will mean massive tax rises in years to come. If the recession lasts two years, the Treasury needs to generate sufficient income from the third year to service the massive borrowing and start to repay it.

The objective of “no more boom and bust” has already failed but we need to ensure the failure continues: we need another boom to finance the cost of surviving the recession. But if taxes are imposed immediately the economy turns up, they will suppress the recovery before it has a chance to flourish.

The recession will last roughly until the next general election and the key issue in that vote will be how the tax is recovered. Whether it is a direct tax on business or a wider tax on consumers - or a specific levy on a City that might by then be recovering - will divide the parties. They cannot rely solely on selling the equity stakes in the banks to finance the debt.

In truth, the future-year figures in the Pre-Budget Report on 24 November may turn out to be wishful thinking, but if anything, they will underestimate the problem we are storing up.

The worry is that Britain is on a borrowing spree that we cannot afford later but which the world cannot afford now.

The government is borrowing to bail out the banks and borrowing to finance tax cuts. But if it takes money from UK savers it takes money out of the economy, which undoes the effects of the fiscal stimulus. Not that many people in Britain were in a saving mode even when they did have spare cash.

Three-quarters of the money Britain has borrowed in recent years has come from abroad, but with low interest rates and low growth prospects, foreigners have less reason to invest here – and if the pound is falling, those investors will find their deposits diminished when they repatriate them.

And with governments abroad also borrowing to rescue their own banks and stimulate their own economies, there is considerable competition for the limited deposits available. For the first time, UK bank rates are lower then the European Central Bank rate.

Yet the UK borrowing spree is expected to take government debt requirements from the £43bn forecast early in 2008 to more than £100bn by 2010. And the need to keep refinancing maturing stock means the state must raise £100bn to achieve that.

So the pressure is on sterling – and thus on ministers. Politics since the second world war has been measured by sterling crises, from Clement Atlee’s devaluation in 1947, Harold Wilson’s devaluation 20 years later, Edward Heath’s flotation of the pound, James Callaghan’s IMF rescue to John Major’s Black Wednesday.

A weak pound is inflationary – though recession may offset some of the higher prices. In theory it makes exports easier, but foreign customers are in little mood to buy and manufacturing is less than 20 per cent of the economy now. And it means Britain is not seeing the benefit of the falls in prices of commodities bought in dollars – especially oil.

Perhaps worse, however, currency is outside the influence of the government or central bank. Just as Gordon Brown seemed to be in charge, he is being undermined by a crisis beyond his control.

For those in doubt, Lloyds’ Scottish registration number is 95,000. Its registered office is Henry Duncan House, 120 George Street, Midlothian, Edinburgh EH2 4LH. It holds its annual general meetings in the country, as those who went to Glasgow to vote this year should remember.

(Henry Duncan, by the way, was the Scotsman who founded the world’s first commercial savings bank.)

So when former bankers Sir Peter Burt and Sir George Mathewson, backed by Scottish Nationalist Party leader Alex Salmond, argue that HBoS should be kept in Scotland they seem not to have noticed that its bidder is already Scottish.

And the reason Lloyds – founded in Birmingham in 1765 by Sampson Lloyd – is Scottish was to keep Mr Salmond’s nationalists happy. Until 1995, it was English.

Scotland does not like losing banks, however – as the fuss over the nationalisation of its two major mismanaged institutions shows. When Standard Chartered and HSBC wanted to buy Royal Bank of Scotland in the 1980s the bids were blocked to protect Scottish banking.

When the Trustee Savings Bank was floated in 1985 it was decided to register the company in Scotland to give the nats another bank. And when Lloyds bid for TSB a decade later after that bank got into trouble, the deal was turned upside down so that little TSB bid for mighty Lloyds to ensure that instead of losing a bank, Scotland gained one. That’s why and when Lloyds became Scottish.

Since then Royal Bank of Scotland has bought the English NatWest. And when the English Halifax merged with the smaller Bank of Scotland, it became Scottish too so that Edinburgh did not lose BoS.

Scotland has done so well in collecting banks that Barclays and HSBC are now the only English banks. They are also the only two not having to be bailed out by the government. What a co-incidence.

The two Scots knights are demanding the resignations of HBoS chairman Lord Stevenson and chief executive Andy Hornby with Burt becoming CEO and Mathewson in the chair.

It is not a takeover therefore, not even a share swap. There is no money going into either the bank or into the pockets of HBoS shareholders.

But if Burt and Matheson had read their newspapers they would know Stevenson and Hornby have resigned already. It was a condition of the UK government underwriting an £11.5bn capital injection for HBoS. The incumbents are simply serving out their notice, probably to be replaced by Lloyds directors.

Had they read the papers they would also have spotted that the £11.5bn injection will make the UK Treasury owner of nearly 60 per cent of HBoS’s shares. The job application should not be to the current chairman but to the chancellor, therefore, and if they did get the jobs, the two knights would become employees of a subsidiary of the government.

But if they do apply to Alistair Darling, their fellow Scot may point out that without the support of Lloyds, HBoS may need a lot more that £11.5bn, and if the extra capital has to come from the state too, it will make the government an even bigger owner of the bank.

He might also confirm reports that as well as bidding £6bn for HBoS, Lloyds is lending it £10bn to shore up its balance sheet. Lloyds stepped in with its rescue when a mauling of HBoS shares by the stockmarket threatened a run by savers. A full run was prevented but HBoS confirms an outflow of retail deposits and Lloyds is presumably taking their place.

Burt and Mathewson have provided no business plan yet but at least there is no hint they expect to take an equity slice for installing themselves and lending their expertise, as Gerry Robinson did with his failed bid for Rentokil or previous bidders did with Sir Terence Conran’s Storehouse.

But Darling might just question the expertise of these banking grandees. It was Burt, 64, who merged his Bank of Scotland with Halifax to produce HBoS and he remained deputy chairman until 2003. Mathewson, 68, was still chairing the equally troubled Royal Bank until 2006. Darling might suggest they carry some of the blame for the problems that hit the two banks in 2007.

The prospect of Scotland’s two great banks becoming government subsidiaries and the shame of their mismanagement is a hard blow to that country, but there is no hint of how the old bankers could restore HBoS’s fortunes, with or without job losses. They cannot match the £1.5bn of synergies that a Lloyds rescue offers.

Like the mooted bid from former HBoS executive Jim Spowart, the Burt-Mathewson proposal is Scotch Mist. It may win them a place in the Scottish Hall of Heroes but it is a non-runner.

Sometimes the electorate is pleased with the change, sometimes the new administration proves no more satisfying than the one they displaced. America was so pleased to eject the Nixon/Ford government in 1976 it preferred Jimmy Carter – until it saw Carter at work and chucked him out in favour of Ronald Reagan.

John McCain was fighting against the odds to beat Obama. He is an old man and poor communicator representing the same party as the unpopular Bush. He did well to get the votes he did, but shackled by those burdens, almost any competent opponent would win.

Obama’s slogan was that it was time for change, and having defeated Hilary Clinton, he was the only choice.

He will be wise to use this apparent popularity - and the joy that many gain from a black man becoming president - to kick start the voters into a psychology that tries to overcome recession with a new confidence. Although the economy was facing a different direction in 1997, look at the change in public attitude that accompanied Blair’s arrival in Downing Street.

Obama must use the two months before he takes office to use his world standing to achieve the change that will revive the US economy. He must associate banking crises, recession and home repossessions with the Bush era and be the start of the recovery, not the perpetuator of downturn.

Business will back him if he can speed the turn in the economy.

He cannot count solely on charisma to win a second term. In 2012, blacks will not vote for him simply because of his colour and Republicans will have a more credible candidate while Bush will be history. Obama needs to establish a track record of success so that people vote for the incumbent rather than vote for change again.

The Bank no more sets interest rates than the stock exchange sets share prices. They both reflect the price at which demand equals supply, and just as a clever market-maker could anticipate that equilibrium point when quoting stock prices, the Bank can often be just ahead of the curve and set interest rates at the level they are heading for anyway.

For a long period, therefore, it looked at though the Bank set rates because it moved them just before the market moved.

But in recent months the Bank’s hopes and the market’s expectations have become incompatible. Libor, the interbank rate that balances supply and demand, has been upto 100 basis points above the base rate set by the Bank.

And that’s before lenders increase their margin over Libor to cover the greater perceived risk.

If central banks could bring down the cost of borrowing they would slash rates at the first whiff of recession – even if they had not slashed them anyway. They cannot. While a cartel like Opec can influence the price of oil by controlling supply, central banks do not control the supply of money.

It requires willing lenders to increase the supply to cut the cost of borrowing – as happened throughout the final decade of the boom. Now they have burned their fingers they are reluctant to lend, so the price is high.

The cuts by the Bank of England generate big headlines and make a policy statement but they make little difference to the cost of borrowing. The only difference between the Bank setting an irrelevant base rate and ministers doing it is to remove some of the politics.