We all know that everything about money comes down to confidence, but normally, because we have that confidence, we do not think about what this means. Now we must. We have learnt that mighty banks are nothing if customers — and other banks — have no confidence in their assets. Panicked, we turn to governments. Only governments, we believe, can ultimately overcome monetary crises, because only they have control of the printing press. If they ‘stand behind’ our banks, our confidence can be restored. That is why Gordon Brown acted as he did on Wednesday morning. But is this necessarily so? In all the amazing scenes of recent weeks, I found that the most alarming has been the picture of Mr Brown, Nicolas Sarkozy, Angela Merkel and Silvio Berlusconi at the weekend, gathered in front of the Elysée Palace to offer a ‘rescue plan’. This was not just because at least three of the four (I am not sure about Mrs Merkel) are discreditable, untruthful people. There was a bigger reason: I realised that I had no confidence in their ability to accomplish what they promised. The eurozone has a monetary authority, but not (thank goodness) a political one. It follows that when the most severe test is applied to the central bank, it will fail. It also follows, unfortunately, that the governments which have surrendered their monetary independence will find themselves incapable of acting independently, or even, probably, together. Hence the panic when Mrs Merkel went home and seemed to guarantee bank deposits, but then (probably) didn’t. What about Britain? We are not part of the single currency. We are free to do what we want, and this week, we appear to have done it. Like the United States, we have a comprehensible chain of authority. This might, just, inspire confidence.
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