Those who not long ago would rail about him in the least elegant of language now nod sagely and say that he is the only minister they trust on the economy, in much the same way they talk of Kenneth Clarke and Vince Cable. The man is a force of nature.

Having swept back from hobnobbing with the Rothschilds in Corfu to take charge of the country, the Business Secretary has certainly been out to woo the City. Reportedly dismayed by what he regards as Alistair Darling’s defeatist approach to European legislation that could “destroy the multibillion pound private equity and hedge fund industry”, he has promised to redouble efforts to fight off Brussels.

Mandelson’s championing of financiers is hardly surprising given his love of any well-connected circle where money, glamour and power mix. He is deemed one of the few senior Labour people with who the City identifies.  Indeed, the eclectic group comprising “Peter’s Friends” includes a host of big business names:  including former BP chief Lord Browne, entrepreneur Jamie Palumbo, and Wall Street Journal boss, Les Hinton.  The powerful family behind the Indian Tata Group, owners of Jaguar Land Rover, are also close friends.

Much good it did them.  How can Mandelson style himself a friend of business when he was prepared to jeopardise thousands of jobs at Jaguar Land Rover by refusing to all the Government to stand as guarantor to enable the company to secure funding. The episode reveals Mandelson’s feet of clay.  He talks of a new industrial policy to help rebuild our economy but has produced nothing substantive to back it.

And it will take a genius even more steeped in the dark arts than Mandelson to persuade a sceptical public that the Government’s handling of the MD Rover affair was anything less than an unmitigated disaster.  Motor industry leaders, it is true, are disillusioned, but Mandelson was right to play hard ball with Jaguar – the Government cannot bail out every private company that gets into difficulties.

Meanwhile, his reputation for delivering is growing in other sectors:  tourism bosses are desperate to ditch the useless Department for Culture, Media and Sport to move to his empire.  For better or worse, business leaders can’t get enough of Lord M.

The conspiracy theories are flying. Could the bubble in commodity and oil prices have been caused by a conspiracy of traders, speculators and investment banks?  And, with prices rising strongly again, are we in for a repeat performance?

We’ve always been sceptical of the market manipulation idea – mainly because the sheer size of the world oil market means that it’s impossible to ‘corner’.  Yet some of Phibro’s activities give pause for thought.  As The New York Times reveals, the company often wagers that the price of oil will rise so quickly that it can make money by storing oil in chartered supertankers until the price goes up.

In theory, we might say this doesn’t matter:  a speculator buying up oil when prices are cheap and then selling it when there’s a shortage can actually even out prices.  But this isn’t an economics workshop.  Citi’s $100 Million Man bought oil and kept it off the market. When you consider the threat of regional bottle necks or – worse – the possibility that total supply could fail because speculators are tying up tankers, its doesn’t look good.

Regulators seem to agree.  The US Commodity Futures Trading Commission (CFTC) will shortly release a report showing speculators played a significant roles in driving wild swings in oil prices - a move bound to intensify scrutiny on investors.  Other watchdogs are falling into line.  In Britain, the FSA has always downplayed the role of speculators.  But – following warnings from Gordon Brown and Nicolas Sarkozy on the need to curb dangerously volatile oil prices – it has met with oil brokers, banks and hedge funds to review regulation.

More transparency might help, but a witchhunt for speculators won’t do much to alleviate price volatility, which is mainly down to the availability, of easy money.  Plenty of factors affect the oil price, concluded mason, not least supply and demand; and most studies show that speculation causes only small swings.  Yet it is worth discovering how this high-risk, high gains trading game is played – and the role it had in creating such a spectacular price bubble.

Economic output has now shrunk by 5.7% in 12 months – an annual collapse rivalling the worst days of the Great Depression.  And yet the London stock market continues to sail serenely upwards, nothing up a remarkable rally of 11 consecutive days of gains.

If the economic news is so gloomy, why are markets so cheerful? One reason might be that those quarterly figures feel wrong – and may well be revised upwards as more data comes in.  Monthly GDP estimates from the National Institute, for instance, suggest that the economy reaches a turning point in the second quarter, and definitely rose in June.

The figures are certainly contradictory.  By the ONS’s own estimate, Britain’s high streets are in a state of rude health with sales volumes rising significantly in June – hardly the sign of an economy mired in a slump.  But, at the very least, this latest data shows that talk of imminent recovery was premature. At a plausible rate of recovery, it will take until 2012 before the economy gets back to where it was when recession began in the spring of last year.  The worst may be over but… there’s a long road ahead.

Fears of a double-dip recession are probably overdone. The consensus view is that the recession, both in Britain and globally, should be over by the start of 2010.  Bu the recovery will be neither straightforward nor swift, meaning markets are set to continue their white-knuckle ride of ups and downs throughout this year and… well into the next.

That is certainly the conventional wisdom after a fall in GDP this steep, but history shows that very few recessions last longer than two years.  And most recoveries, once they start are strong… The pattern of duration is virtually identical, regardless of the size of the initial shock.

When a recession reaches a certain size or duration, recovery is harder and more sluggish.  But it takes an awful lot to depress Keynes’s animal spirits for more than a couple of years.  Markets are probably right in their upbeat outlook:  capitalism seems a pretty resilient beast.

Hopes weren’t high.  Walker was dismissed by many as a City old boy who would never turn on his own. But what he has to say is both sensible and useful.  He proposes beefing up boards to counter over-powerful executives by putting non-executives in charge of new shareholders with pressure from regulators id they fail to exercise proper stewardship.

Pragmatic, certainly, but the most striking thing about this report is that so banal a set of recommendations were necessary.  It’s all great in principle, but there are big cultural barriers to practical application.  The risk function in most banks is so low status, for example, that it is hard to imagine even the best practitioners stomping around in hobnail boots when the chief executive comes up with a whizzy M&A transaction.  You can hear the next lot in front of the Treasury Select Committee already.  “Well, our head of risk said, go right ahead…”

Given the British public’s one-point agenda to punish the banksters, it’s not surprising that Walker’s most controversial proposals centre on bonuses. Some senior bankers claim the move to defer half the pot for three, or even five years, could prove as damaging to London’s competitiveness as the Sarbanes-Oxley reforms were to Wall Street.

And Walker was surely playing to the public gallery by calling for compulsory disclosure of the biggest packages which has nothing to do with  improving corporate governance or preventing future crisis.  In fact, given the failure of past voluntary governance initiates, there’s every reason to be cynical that the new reforms will make a lasting difference. The history of remuneration reform is littered with the corpses of do-gooders… steamrollered by market forces or bypassed by cunning advisors.

At least Sir David tried.  But the real onus is on governments to push for higher standards internationally – and then enforce them at home.

At that rate, bank staff could earn an average $770,000 this year, with packages for senior executives and bankers running well in to the high millions.  It would be easy to forget there’s a financial crisis still going on, but Goldman should expect renewed political and public anger.  It might insist it has to pay to keep the brightest and best, but it would be foolhardy to believe these arguments will placate a restive public.

Slurp – the great vampire squid strikes again!.  It takes some sucking power to extract $3.4bn of quarterly net income within a year of a full-throated banking crisis. So how did they do it? The vast bulk of the cash came from plain vanilla stuff, like helping companies raise money from share issues, and Goldman has undoubtedly profited from the fact that so many competitors have either died or retrenched.

But are these huge profits a one-time wonder? Beneath Goldman’s gleaming mantle is cephalopod swimming with one powerful arm.  The huge spring boom in client trading was no more business as usual than the events of last autumn; and Goldman’s other arms remain weak.  And with $171bn in excess liquidity now in its coffers, the government could yet opt to cut this sucker down to size.

Goldman attracts admiration and loathing in equal measure: no bank seems better capable at looking after its own interests. But if more capital is required to make the banking system safer, returns are bound to fall.  The goose that laid the Goldman egg could yet be killed by regulation, but the behaviour of survivors like Goldman suggests the opposite. They are hiring staff on salaries and bonus packages that make sense only if the days of mega-profits have returned permanently.

The question for governments is whether they are prepared to tolerate this state of affairs indefinitely.  It’s time to ask whether exceptional profits deserve exceptional rates of taxation. If we, the taxpayers, are obliged to underwrite the banking system, it is surely right to extract a fair price for that guarantee.  That’s how pricing power works – as Goldman would presumably understand.

As expected, the Chancellor made clear that he did not favour splitting up big and complex global banks, dubbing such proposals “simplistic”.  Instead, they will be forced to hold more capital to absorb losses and to have greater liquid assets to guard against a run on deposits.  The riskier a bank’s operations are deemed to be, the more capital they will have to hold. There will also be a new “backstop” power to prevent them borrowing too much.

The initial reaction from the City was broadly positive.  As well it might be. Investment banks, including Barclays Capital, are already inventing schemes to reduce the capital cost of risky assets on balance sheets to a practice BarCap calls smart securitisation.  Some will see this as a sign that financial boffins have already found a way to run rings around rules on capital designed to make banks safer.

Certainly signs of life in the securitisations market should serve as a warning to regulators: the plan to impose higher capital thresholds will only succeed if the riskiness of the derivative products can be accurately monitored. What does the White Paper say on that?  Not much. Little detail was given on how macro-prudential oversight is to work, or who will be in charge. As such, the Chancellor’s proposals are a wholly inadequate response to the banking crisis.

The bottom line is that Alistair Darling has plumped for fudge. Perhaps the biggest dollop is the new Council for Financial Stability, which is actually just a rechristened version of the old tripartite system, comprising the Treasury, the FSA and the Bank of England. The old trio failed miserably, largely because they couldn’t communicate effectively and things fell through the cracks.

In future, both the bank and the FSA will have slightly broader powers and the Council - chaired by the Chancellor - will be more transparent.  But these are mere tweaks.  The Chancellor has also deferred the important questions of exactly how counter-cyclical measures, such as jacking up capital ratios, will be applied.

Getting the details right is clearly important, but so is getting things done.  There is some good stuff in this White Paper, but unless momentum is maintained, the Government could end up wasting a good crisis.

Goldman Sachs staff are now looking forward to the biggest payout in the bank’s 140-year history.  Many other investment banks are anticipating stellar profits in no small part as a result of the chaos caused by their previous activities.  Bond markets are hectic as a result of governments’ needs to finance their deficits, while economic problems have created (profitable) volatility in foreign exchange markets.

When even majority government-owned banks, like RBS, join the party, you know the system is rotten. RBS chief Stephen Hester’s £9.6m bonus shows that bankers haven’t changed.  Indeed, there is growing suspicion that this lethal breed is going back to business as usual, although the financial crisis remains unresolved – frightening prospect for taxpayers everywhere.

Fading political will to secure a strong regulatory response – and a good deal of sustained lobbying – would appear to have let banks off the hook.  That is dangerous, particularly against a background of unresolved global imbalances.  There must be a possibility that, with bankers once again at play, the financial system will return to chaos in the not too distant future.

What should be done?  Bank of England Governor, Mervyn King, argues that investment and retail banking should be separated, along the lines of the old US Glass-Steagall act. His reasoning is that it is too risky for high street banks to continue playing in the casino of investment banking.  The problem, though, is that shrinking banks so dramatically would generate a big chill just as the markets are beginning to unfreeze.

Without its investment banking division, Barclays would have joined RBS and Lloyds as a burden on the taxpayer.  It would be better to follow the FSA’s strategy of making banks reserve more capital the banks warn that even a tamer crackdown could stifle recovery, because the more capital and liquidity a bank has to hold, the less they are able to lend.

That’s a valid point.  The crucial thing now is to get enough money into the system to get the taxpayer off the hook, keep good businesses alive, and convince jittery foreigners to find the Government’s truly extraordinary borrowing requirements.  The niceties of financial regulation can wait.

Darling delivered a lacklustre speech on regulation, setting things up nicely for the Governor’s putsch.  King is making a power grab:  not only does he want to put the Bank in charge of spotting squelching future threats to financial stability; given the chance, he’d break up Britain’s biggest banks, too.  The Treasury is opposed to both measures; the Tories broadly sympathetic.

The financial crisis has descended into a tedious soap opera.  Alistair and Mervyn have fallen out again.  The guv’nor is getting matier with David and George… It’s all so trivial.  Instead of arguing about who should be sheriff, we should begin with the broader question of what sort of financial system we actually want.

Yet the sheriff question is key.  The tripartite system of joint regulation (between the Bank, the FSA and the Treasury) which Darling defends in such lukewarm fashion clearly hasn’t worked.  The tatters of the British financial system are testament to its failures. Indeed, in continuing to champion it, Darling has cast himself outside consensus.

A key measure of President Obama’s regulatory blueprint is to put the US FED into the cockpit.  King’s wise proposal echoes that.  The FSA should be left to deal with consumer protection and the solvency of individual banks, leaving the Bank to safeguard against systemic risk.

There are regulatory battles everywhere.  This week’s tussle between Gordon Brown and Brussels over fiscal independence was a more significant encounter than the Darling-King scrap.  Who would you prefer to, make judgements about the UK banking system, Mervyn King or the European Central Bank? The PM, fortunately, secured an opt-out.

Clearly, the posse of global regulators is breaking up as national interests assert themselves, and, given the confusions, that’s all the more reasons why Darling is right not to rush reform.  The FSA chairman, Lord Turned, fears that the will to reform… could weaken as recovery takes hold.  Perhaps, but until you know what new levers you want to give the regulators, you can’t really decide who should pull them.  Darling is right to take his time.  We need to get this one right.

The most weighty of the green-shootists is the National Institute of Economic and Social research.  If the NIESR is right, and they have been in the past, there’s a good chance that official GDP figures could show a flattening in the second quarter and a return to growth in the third.  Good grief!  The Chancellors’ much-derided Budget forecast could turn out to have been right all along.

Perhaps there is an economist’s recovery but, with large numbers of job losses still to come, the pain for many ordinary Britons is just beginning.  Meanwhile there’s a danger that we lose something crucial amid all the green spouting.  Momentum for reforming the financial sector and for rebalancing the UK economy was strong in the depths of crisis.  Now it is palpably slipping away… on the slenderest of pretexts.

Forget green shoots, GMB union leader Paul Kenny said, what we are actually seeing is “greed shoots”.  The “recovery” seems to consist largely of bankers getting “the financial gravy train back on the tracks” – witness the recent huge payouts at Barclays.  Yet it is clear that the banking system is not yet out of the woods.  The ECB warns of a further bank writedowns totalling $283bn this year:  a bleak outlook.

There is now a big risk that central banks and governments will move too swiftly out of recession-mode strategy and begin reversing their supportive monetary and fiscal policies.  There were hints of such exit strategies at the last G8 meeting.  Yet there is still meltdown potential, especially in Europe.  Latvia, for example, is a ticking time bomb.

Some economists think that the world has dodged a bullet.  The risk of an all-out Great Depression… has receded, but historical analysis by economists Barry Eichengreen and Kevin O’Rouke gives pause for thought.  The bad news is that this recession fully matches the early part of the Great Depression.  The good news is that the worst can still be averted.  But we shouldn’t delude ourselves.  The path to full recovery is likely to be long, hard and uncertain.

It looks like output will start to grow again by the end of the year.  But the recovery will be sluggish, and could be short-lived – and swingeing job cuts and business insolvencies could make it feel far worse next year.  So what are we to make of the bizarre appointment of Sir Alan Sugar to the House of Lords as enterprise tsar? A serious man for serious times, no doubt.

Sugar seems to have a lifelong gift for boarding sinking ships, leaving computers for property and property for politics.  Yet, as he has shown on The Apprentice, at least he is comfy on camera – which is more than the PM can say.  How Gordon Brown must envy him.  He doesn’t have charm.  There’s no sign of any emotional intelligence.  His sense of humour is oddly stunted and he’s stubborn, arrogant and mouthy. And yet the public not only love him, but back him in their millions with their remote control.  But will he get results?

Sugar’s stated aim is “to help out businesses and act as a kind of giant Dragon’s Den… although not with my money”; he plans to act as an intermediary between banks and companies.  But that may be as empty a promise to the average small business as every other emergency enterprise package:  you only get the cash if you can show you don’t need it.

Sugar’s recent track record in business hasn’t exactly been brilliant, and he’s not always the most prescient forecaster:  “Next Christmas, the iPod will be dead, finished, gone, kaput,” he predicted in 2005.  But there’s a lot more to him than boardroom bluster.  The Amstrad PC genuinely revolutionised consumer electronics in Britain, and that alone makes him a business visionary.  But that was a long time ago and you’d think the less-than-happy experience of Lord (Digby) Jones in Whitehall would have dulled Brown’s enthusiasm for bringing bumptious businessmen into the big tent.

You can’t help thinking the PM has missed a trick.  Who better to knock the banks into line than Sugar’s sidekick, Margaret Mountford?  The strategic application of that sceptical scowl and cocked eyebrows would soon stop them coming up with another fiasco like subprimes. Never mind Lord Sugar, bring on lady Salt.