bank halted trading in Gulf Bank, one of the country's largest lenders, after one of its clients defaulted on a large derivatives contract. The Saudis are dipping into their reserves to help people borrow for their businesses and important family celebrations.

The Russians and Venezuelans are now rueing all the cash they flushed away when oil sold for more than $100 a barrel, as its price has since fallen by a third.

The only winners in all this seem to be the clutch of hedge fund managers who shorted everything this year. When their astronomical returns are announced, they should beware a vicious public reaction.

At the Federal Reserve in Washington DC, billions of dollars in support for banks and firms hobbled by the credit crunch are now finally making their way into the system. There are signs that banks are starting to lend to each other again, if not to companies and ordinary consumers. But the Fed has no means to force them to lend, besides giving them a huge guilt trip.

Still, the Fed is far from done. It is

expected to cut its short-term interest rate again on Wednesday, to levels last seen after 9/11. But will this, or Gordon Brown's nationalisation of Britain's banks and his promise to borrow his way out of the crisis, do anything to help?

The real challenge for governments is to restore trust in the financial system. There are trillions of dollars in investable cash sitting on the sidelines of the global economy today because investors, rightly, no longer trust what banks try to sell them. Until they do, the crisis will persist.

And some economists are now scarily saying that the problems in the United States and Britain are going beyond simple liquidity, the ability to meet one's short-term debt obligations, towards solvency, the ability ever to pay back one's debts. It seems extraordinary even to be discussing the notion of a bankrupt United States, but that is where we are.