A sad day as it's announced by the BBC that Woolworths has gone into administration...

Having worked on Financial Director for almost half its life (and much of mine)I've always had a soft spot for the retailer. Nothing to do with the pick 'n' mix counter, but more because of some words of wisdom uttered by former chief executive Geoff Mulcahy many years ago. So many years ago, in fact, that it was in the very first issue of this magazine, back in October 1984. And they were words of such pithiness (is that a word? it is now) that on several occasions I have given a half-hour long presentation using just one PowerPoint slide - and it contained these words:

"The financial director is in an almost unique position, apart from the MD, of being involved in all aspects of the business."

Big deal, you may think -- especially you younger readers -- except that that was pretty revolutionary in those days, when even two of the four big banks didn't have a finance director and, for many companies, the FD's role was basically that of a glorified chief accountant.

Times have changed, the role of the FD is now (and has been for many years) rightly seen as absolutely crucial. The high street has changed, too. Now, almost 25 years after Mulcahy's influential words, we can't help but think what a shame Woolworths couldn't keep up.

A friend draws our attention to this comment in the Washington Post...

"From mid-September to Nov. 21, there were 50 trading days; on 25, the market moved 4% or more (16 down, nine up), reports Wilshire Associates. In the previous 25 years, there were just 25 daily moves of 4% or more.

"We've gone from one a year to one every other day."

Volatile enough for you?

It's hard to escape the conclusion that Chancellor Darling-Brown is guilty of exactly the sort of financial mismanagement that got us all into this mess in the first place. By borrowing against the future to finance some politically expedient tax cuts today, Darling-Brown is building up a debt burden that seems certain to hit the 12-zeros bracket - £1,000,000,000,000.

But that, reckons Darling-Brown, will be a price worth paying because our glorious leader will have ridden to an even more glorious victory, having achieved the truly miraculous stunt of looking good in the midst of a financial crisis. After the election, there will be another five years to shovel the muck out of the stable so no point worrying about it now.

What's intriguing is the number of vox pops I've read in the papers and seen on the telly where people think that the 2.5% cut in VAT really doesn't add up to much - certainly not in an environment where people are worried about their jobs and their mortgages, and with the likes of Marks & Spencer offering 20% off.

People aren't being fooled by it. The VAT cut costs us all £12bn - but while it's a huge dollop of jam, it's spread so thinly across all consumers that it can't really be expected to have the supposedly desired effect of keeping the economy rolling. And people know that the tax cut is only temporary, that we're all going to have to pay it back later. And judging by the vox pops, people are going to pocket the money, not spend it - which perhaps proves that the person on the Clapham omnibus knows more than Chancellor Darling-Brown.

Honda, makers of the best TV car ads since Volkswagen, has announced that it is closing its Swindon plant for all of February and March - a 50-day shutdown - as part of its plan to cut production by 21,000 vehicles in the UK.

We hope it's not another example of their slogan "The power of dreams" when they say they have no plans for any redundancies, as such.

As we write this, the BBC reports that a Saudi supertanker has been seized by pirates in the Indian Ocean and is heading to Somalia. The huge vessel apparently contains a quarter of Saudi Arabia's daily oil output - 2 million barrels - enough to create a quite awful environmental disaster should the ship be mishandled or a violent rescue attempt bungled, never mind the economic cost or the cost in terms of human lives.

Up until now, pirates in the area have tended to take over smaller ships. Now it seems almost no ship is impervious to these violent criminals. Not much else to say at the moment other than, well, we warned you, back in April 2006. Have a look at our cover story on piracy on the high seas and other risks.

Three-month sterling Libor was fixed a little lower today, as was the euro. Dollar Libor is a smidgeon higher, probably digesting last week's news that the Fed is scrapping the toxic asset buyback programme having spent $300bn of the allowed $700bn on it.

..................3m Libor......Official rate.......Premium
Sterling --- 4.14875% ----- 3.0% --------- 1.14875%
Dollar ------2.23875% ----- 1.0% --------- 1.23875%
Euro ------- 4.1875% ------ 3.25% -------- 0.9375%

How embarrassing for US Fed chairman Hank Paulson. Not many weeks ago he was literally on his knees, begging Congress to agree to the $700bn Troubled Asset Relief Programme (or Tarp - or Toxic Asset RePurchase, more like).

Guess what: having spent almost half the money, TARP is being scrapped. Instead of bailing out Wall Street banks by buying back all the crappy toys they broke, the Fed has decided that it ought to follow the British idea of propping up the balance sheets of the banks, recapitalising them and - shock horror! - buying stakes in them.

Such socialism is, of course, but a heartbeat away from communism and the Gulags as far as most American politicians are concerned. Maybe they simply need to think about it as "Federal capitalism": "If you want our help to not go bust, we want a piece of the action". Or perhaps simply regard it as a more effective use of taxpayers' money

As for us, we don't pretend that we saw this coming, but we did point out plenty of flaws with the original plan. Now, as we'd feared, we're worried about what happens to the market value of the junk that's now on the Fed's books, given it's abandoned the programme half-way through. Half a buy-back grogramme looks worse than none at all.

Three-month sterling Libor was fixed at 4.2025% today reports FT Alphaville, its lowest level since February 2004, but the spread over Bank Rate remains stubbornly high. What's it gonna take???

..................3m Libor......Official rate.......Premium
Sterling --- 4.2025% ------- 3.0% --------- 1.2025%
Dollar -----2.14875% ------ 1.0% --------- 1.14875%
Euro ------- 4.23125% ----- 3.25% -------- 0.98125%

Oil has gone below $55 today, by the way, as Germany is now officially in recession...

To hell with the credit crunch. it's time to celebrate excellence. The Accountancy Age Awards are the most sought-after gongs in the industry and there's a star-encrusted shortlist vying for all the categories. Want to know who the Blue Chip FD of the Year is? Who's the top finance team? And who is Personality of the Year? The list of winners can be found by clicking here...!

The British Bankers Association announced this morning that 3-month sterling Libor was a whisker under 4.5%, barely a point lower than it was yesterday before the point-and-a-half cut in Bank Rate.

Today's 3-month rate, 4.49625%, is almost 150 basis points above Bank Rate, and barely a quarter of a point less than the 178bp margin over base after last month's almost ineffectual 50bp rate cut.

It's a start, but bankers clearly still don't trust each other enough - so there ain't no way they're all going to pass on all of the Bank Rate cut to their mortgage customers. Expect a Class A political backlash as a result, given that not even the government seems to fully understand the importance of interbank rates to the consumer mortgage market.

Of course, if the banks do ignore the more muted Libor cut and pass on all the Bank Rate cut to customers, that'll reduce their profit margins. Hmm. Who owns huge chunks of the banks? Oh, yeah. We, the taxpayers, do.

Readers of Financial Director know that we always carry the latest yield curves in the magazine. For technical reasons I can't do that on the web (don't ask) - so on the basis that a thousand words are worth one picture, I'll describe this morning's sterling yield curve...

• At the one-year end, rates are now at around 2.25%, rising to about 3.3% when you get beyond three years.
• The curve then rises less steeply up to 4.9% in the 16-20 year band, where it peaks.
• A gentle dip at the 30-year end takes long rates down to 4.5%.

Of course, this is all based on government paper and bears no relation at all to what you corporate guys have to pay!

The Bank of England has slashed interest rates by one-and-a-half points, from 4.5% to just 3%.

Frantic consultation of the history books isn't really necessary to be able to confidently declare that this is a remarkable day in the history of this economic crisis.

Most pundits expected at least half a point off, a few thought a full point. So what has the Monetary Policy Committee been shown that we're all not aware of yet? And so is this the best news we've heard all week, or a sign that the Bank thinks things are even worse than we imagine?

13.18 It turns out that Base Rate is now at a 53-year-low. The FTSE-100 surged on the news for about 30 seconds, but is now more or less where it was before the news. No doubt everyone is digesting the BoE's comments that "There has been a very marked deterioration in the outlook for economic activity at home and abroad."

13.20 The European Central Bank has cut rates by half a point, from 3.75% to 3.25%.

13.38 Economists at Bank of America say "We continue to look for a 2% trough in the Bank rate in 1Q 2009 with a rising chance the BoE could lower rates even further to 1.5%."

14.34 Okay, we've just worked out that this is the first time ever that UK base rate has been below the official euro ECB rate..... The FTSE-100 is still trying to make sense of it all, trading sideways at the moment.

19.50 Just spotted this statement from KPMG chief economist Andrew Smith, saying "it would not now be surprising to see rates down to 1% or even lower within the coming year". Japanese-style, decade-long, zero-interest rate recession, anyone?

09.50, 7/11/08 Naturally, everyone is baying for bankers' blood if they don't pass on the 150bp rate cut in full to their borrowers. Obviously, we wouldn't be in this mess if it weren't for the fact that Libor is much more important than Bank Base rate when it comes to determining the banks' finance costs. The British Bankers Association releases the first-reaction Libor rate around noon today. We'll update you.

Libor news: click here

Her Majesty's Treasury has just announced that the government's investments in banks are to be consolidated into a holding company called UK Financial Investments Limited.

So off we toddled to Companies House to have a look at the documents. And lo, you'll not be surprised to read that the objects clause in the mem & arts includes.....

• To carry on business as a general commercial company and to carry on any trade or business whatsoever.
• To act as a holding company.
• To provide services of all descriptions.
• To lend money, and grant or provide credit and financial accommodation to any person and to deposit money with any person.
• To invest money of the company in any investments and to hold, sell or otherwise deal with investments or currencies or other financial assets.
• To borrow and raise money...
• To enter into any guarantee, contract of indemnity or suretyship...

Okay, it's only an objects clause and Lord knows they don't really mean anything much these days. Still sends a shiver down the spine, though, doesn't it? I mean, here we go again.....