The long predicted influenza pandemic appears to be upon us, with more than 20 cases reported in the US at this writing. Last year, the World Bank predicted a pandemic would affect the world economy by a 5pc drop in output.

The US government has declared a health emergency, with Homeland Security chief effectively saying “Don’t panic.”

The danger is a kind of pandemic protectionism spreads around the world, adding to its economic woes. Already pork from Mexico has been banned by China and Russia. The ban has now been extended to Texas, California and Kansas. We can be sure that is only the beginning.

A serious 1918 type of pandemic, which killed millions around the globe, would really challenge the world economy and set it back a decade at least.

Let us hope it doesn’t come to that.

With the Bank of England already deep into the process of printing money by buying back the government’s debt, The Fed has yet to attempt this operation, preferring to buy corporate bonds instead.

The potential inflationary effects are the main are of concern. Others take the line that the Bank in the UK 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.

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

Ahead of the curve

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

Will QE work?

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.

As Gordon Brown, former British Chancellor, now Prime Minister, heads for Washington to try to convince the new adminstration to set up a “global regulatory system” the Americans should ask themselves why they should believe him when he failed so spectacularly for 12 years.

At home, Brown has come in for stern criticism in recent days for his failure to stop the immense and growing disaster occurring in the British economy.

Lord Turner, new head of the Financial Services Authority (FSA), blames Brown when Chancellor for the failure of regulation which led to catastrophic losses at Northern Rock, HBOS and RBS.

“They existed within a political philosophy where all the pressure on the FSA was not to say ‘why aren’t you looking at these business models?’, but ‘why are you being so heavy and intrusive, can’t you make your regulation a bit more light touch?’,” he said.

“We were supervising people like HBOS within a particular philosophy of the way you do regulation, which I think in retrospect was wrong. I think (the FSA’s actions were) a competent execution of a style of regulation and a philosophy in regulation which was, in retrospect, mistaken.”

Similarly, Bank of England Governor Mervyn King claims he has been shouting warnings for years about risky lending without any response from Brown.

It is on the record that Brown delivered a speech in the City urging them to take even greater risks.

The Prime Minister is now trying to cover up the mess by throwing the kitchen sink at sacked RBS boss Fred Goodwin’s enormous pension. Significantly this was done as the Treasury unveiled its third bank bailout in the form of a £325 billion insurance scheme for desperate RBS.

Meanwhile the head of the Audit Commission, Steve Bundred, warned that public debt is at “Armageddon levels” and will exceed two-thirds of the entire annual economic output of the country.

Send this man back with a flea in his ear.

If things are bad in America, consider the vertiginous descent of the UK in what is surely the Great Depression 2.0.

Bank of England Deputy Governor, Charles Bean, indicated today that the Bank is moving relentlessly towards the most controversial form of “printing money”, buying gilts, or Treasury bonds.

He spoke in the context of a further adjustment on the downside for GDP this year. The previous forecast was -4 percent. That now has a 75 percent chance of going lower still.

Although the Bank has been tinkering with “quantitative easing”, as it’s known, it was not clear whether it would wheel out the big gun of covering government debt.

Charles Bean also indicated that further cuts in interest rates are likely, falling from the current level of 1 percent to, presumably, the American level of a tiny squeak above zero.

He was said to be relaxed about the fall in sterling and an additional tweaking of rates lower, indicating that the falling pound is not high on the alarm agenda right now.

The BoE believes a further rate cut is necessary before it can begin full-scale quantitative easing.

When America sneezes …