On Tuesday, the Bank of England began the arcane process of printing money by buying back the government’s debt.

The decision has had mixed reviews from the press.

The potential inflationary effects are the main are of concern. Others take the line that the Bank could do little else to boost the money supply, while a few politicians have pointed out that broad money (M4) is already rising by 20+ percent.

A good primer on the pros and cons is given by the BBC’s Business Editor, Robert Peston on his blog:

Will QE work?

Not to be outdone the BBC’s Economics Editor, Stephanie Flanders, also weighs in with an informative piece on how the Americans are doing it — mainly by buying corporate bonds, not Treasuries:

Ahead of the curve

My favourite is by the Daily Mail’s City Editor, Alex Brummer, who today gives an emphatic thumbs down to the whole operation.

Bank’s great experiment may prove gamble too far

Syntagma also greeted the “new dawn” of lumpen monetarism with incredulity:

Watch out for the mashed potato machine

Food for thought.

Still no good news on the macroeconomic front.

American investment bank Goldman Sachs believes that America will lead Britain and Europe out of the credit crunch.

In many ways that’s a statement of the obvious since the U.S. economy is usually nine months to a year ahead of its transatlantic partners. And whereas Ben Bernanke at the FED and the Government in Washington have pulled out all the stops to limit the damage, Britain and the eurozone have been slow to react and have concentrated their fire on the dangers of inflation.

David Viniar, Chief Financial Officer at Goldman’s said, “March was the low point up until now, but if I try and predict the future, I am likely to be wrong.

“Do I think we are through? No, I don’t, but I think there is a lot behind us. Now there is less concern about systemic liquidity risk. People are focused individual investments and credit.”

The real danger now appears to be inflation, driven by oil and food prices. That would be reduced by a worldwide downturn. Experience tells us though, that once inflation sets in, it’s a long hard slog to get rid of it, simply because the remedy is recession itself.

Goldman Sachs appears to be enjoying a “flight to quality” effect as the economic downturn hits America. Its position is strong, since it seems to have avoided the worst losses in the structured investment vehicle scandal. Investors now see the bank as a safe haven.

A version of this article appeared in Syntagma recently.

As we predicted here, this credit crunch cum downturn cum recession cum slump cum … was always going to happen in slow motion. That’s because of the normal lags involved in the transfer of economic conditions between countries and continents. Britain is said to be around nine months to a year behind America.

While the U.S. downturn started at the back end of last summer, it’s only now starting to decimate the British economy and parts of the eurozone. If we want to know how bad it’s going to get, we only need to peer across the Pond.

Gold rushes come and go in the world’s innovation capital, California. But when they go … they really go.

The City of Vallejo in California has filed for Chapter 9 bankruptcy, making history it seems. Half Moon Bay, home to some internet digerati, may well be next. According to John Moorlach, Orange County board chief, “This is the tip of the iceberg: everybody is going to line up for Chapter 9 in California.”

What can it mean to people on the ground when their city goes belly up? What of their assets, houses etcetera? It will be interesting to watch this pan out.

According to Goldman Sachs and Lehman Brothers American house prices are likely to fall 25pc from peak to trough. With between 10m and 12m households in negative equity already, there’s still a way to go.

Shares across the developed world are set for big falls too. Albert Edward Société Générale’s global strategist says, “Nowhere and nothing will be immune. We are on the cusp of an equity meltdown that will slash and shred portfolios. We see a global recession unfolding. Liquidity will drain away and crush the twin emerging market and commodity bubbles. The recent hope that ‘the worst might be over’ is truly staggering. Profits are disintegrating.”

Ambrose Evans Pritchard of the Telegraph (UK) — ever the Cassandra (rightly so, in my view) — says pointedly, “Britain, Europe, Japan, and China will go down before America comes back up. This is turning into a synchronised bust, after all. The Global Slump of 2008-09 is under way.”

The Bank of England and the European Central Bank are still stubbornly refusing to cut rates because of inflation fears, which will be the least of our miseries in the next two years and should abate soon as global demand falls off the much-imagined cliff.

It’s probably true that Ben Bernanke’s Federal Reserve has saved the U.S. and other countries from another Great Depression. But nothing can stop a slump now because it’s already happening.

America’s third biggest bank, JP Morgan — which has been involved in the rescue of the fifth largest, Bear Stearns — has been hit again by the subprime crisis.

This time the blow is more than $5 billion (£2.6bn), taking its credit crunch losses to around $15 billion since August — an unparalleled rate of attrition.

Meanwhile, the bank’s profits tumbled by 51pc to $2.5 billion in Q1, eased slightly by a winning bet on the flotation of card giant, Visa.

Since the Fed is backing JP’s rescue of Bear with $30 billion, this will send a shudder down the spine of Ben Bernanke, the Federal Reserve’s Chairman.

Signs that the crunch is biting even deeper are coming across the board. House building in the U.S. is now at its lowest level for 17 years. JP Morgan suffered a 20pc reversal in its credit card division, while its retail banking arm slipped by over a billion dollars.

JP’s chief, Jamie Dimon, said, “The Economic environment will continue to be weak and the capital markets will remain under stress.”

With Britain beginning to feel the strain, along with some European economies, it’s clear that the worst is still to come.