As the mist cleared from Canary Wharf this morning, it almost felt like we were waking up in the People’s Republic of Britain. We now have a nationalised banking sector. OK, partly nationalised. But who could have imagined such a thing even last month?

Hot on the heels of the Paulson Plan (aka the Bush Bank Bailout Bill), we had our own multi-billion pound bailout plan in the UK today. It’s about the same size as the US plan (£400bn / $692bn) , despite our economy being 1/5 of the size. Call me biased, but it seems to be money more wisely spent too, since it focuses on recapitalisation and liquidity rather than buying up bad debts. It also comes with strings attached, notably limits to those excessive banker bonuses. Then, later in the day, an unprecedented co-ordinated cutting of interest rates by 0.5% by six central banks.

Banks are one thing. But there’s also the possibility of a whole country going bankrupt. Iceland may have the population of Coventry, but it’s had a huge banking sector for years, which has just gone bust. What do you do with a bankrupt country? There are rumours of it joining the EU just so that it can get some cash, like the LloydsTSB takeover of HBOS.

I’m worried about the financial crisis. I’m less concerned by the economic crisis. They are different.

The financial crisis – aka the banking crisis – is the current collapse of financial institutions and high street banks, which the Paulson Plan and Darling Deal are trying to fix. The worry is that banks are not even lending to each other, much less small businesses and consumers, leaving us all high and dry. Any business will tell you that cashflow issues are far more dangerous than a decline in sales.

The economic crisis – aka the recession – is the crisis yet to come. And it’s less of a crisis. We know how to deal with a recession. We’ve had them before. As I’ve previously mentioned, I’m not too concerned by its effect on my business, and I think there are ways and strategies that any business  can employ to minimise the effects of an economic downturn.

I hope today’s rescue package works. Will Hutton seems more than happy with it, which I take as a good sign. And it worked for Sweden in the early 90s. I just want all this nonsense to settle down, so we can breathe a sigh of relief and say “phew, glad that’s over – at least all we have to deal with now is a recession.”