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It feels bittersweet to find a half-price Johnny Cash CD, and hand over the payment to one of the thousands of Woolworths staff who will be out of work by Monday evening - part of a strange end-of-year mix.

Amid the gloom, there are plus points. Sir Sandy Crombie, as we should now address the chief executive of Standard Life, is honoured with a knighthood as a sort of message to others that caution in money management is to be valued - though, of course, it's under-valued by the round boardroom table of other banking knights whose titles date back to the era of aggressive corporate growth and greed. (Read more about Sir Sandy in my blog of 23 December.)

And Aberdeen Asset Management ends the year on a high, announcing at the start of 2008's final morning's trading that it has gained £40bn of funds under management through a deal with Credit Suisse, on top of more than £100bn it has built up through previous acquisitions.

If the Swiss giant's calculation of goodwill is any guide, it looks like a good deal for the Aberdonians, and bad luck for Schroders, which was reported to be on the hunt for the same Zurich business. The stock market this morning rewarded AAM with the sharpest rise of the day.

It comes at the price of a quarter of the share ownership now being controlled by Credit Suisse.

We don't know if that will turn out to be good for AAM. It builds on regions of the world - Britain, Germany, Switzerland, Japan and Australia - where it already has strengths, and adds access to Credit Suisse's distribution network.

The deal is a sign of a changing world order in finance, as distressed banks retrench and sell off assets in a bid to rebuild their balance sheets, meaning those who were cautious enough to avoid risky investments during the bubble years can now be in the market for such cut-price acquisition and could emerge from the recession in a strong position. As chief executive Martin Gilbert said, he would rather AAM is an acquirer rather than one of the acquired at a time of consolidation.

The dot-com bubble and bust was the basis from which Google built its empire in less than a decade. Similarly, the big banks of tomorrow may now be making their vital moves now. Could one of them turn out to be based in Queen's Terrace, Aberdeen?

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• - What's this?

On Radio Scotland's 'Newsweek Scotland' programme, I was asked to reflect on recent banking events, having attended the three meetings at which shareholders agreed to the government's bailout.

It's been suggested I put my script on this blog. How could I refuse? It went something like this:

Stevenson, McKillop, Blank. Not household names, though perhaps they should be.

A politician who landed in doo-doo as deep as these guys did has to answer for it down the barrel of a TV camera.

But the chairmen of the three banks - together requiring a bailout from the government of £37bn (let's say that again, lest we get too used to it ... thirty-seven billion pounds) have been oddly reluctant to step forward and explain themselves, what went wrong and why the public have to clear up after them.

But for Sir Victor Blank, Sir Tom McKillop and Lord Dennis Stevenson there's been a more private reckoning.

If you head a public company, the people who can call you to account are your shareholders. And this is when the crusty chairman earns his crust.

So that's why, in recent weeks and without being allowed to record it, I have sat through the toe-curling embarrassment as one noble lord and two grand knights of the corporate realm have faced up to ... the little people, the lesser mortals.

In each case, they arrived at the meeting with enough votes in their back pockets from their institutional investors to guarantee 90 plus per cent of the votes.

But in each case, they had to take their punishment for as long as small-scale shareholders wished to keep asking questions.

The bosses could only hope other shareholders got bored, hungry or, in the case of Lloyds TSB, for the Glasgow conference centre chill to remove all feeling from their toes.

Given the scale of the calamity that's befallen the Royal Bank of Scotland, Halifax Bank of Scotland and Lloyds TSB, it's surely not asking much for these chairmen to face two or three hours of mainly harmless humiliation.

But this wasn't any interrogation. The few hundred people who make it their business to, well, to take care of business are overwhelmingly retired and male ... blazers and bristling indignation.

Questions come from curmudgeons, bores, some probe at the minutiae of company law and accounting standards. One complained about the parking charges.

Most, however, are the backbone of middle class Britain - people who saved and invested in blue chip banks, little thinking them a serious risk.

There are former bank staff, all book-keeping caution and respectability, unable to comprehend how centuries of tradition fell into the hands of people - one notoriously arrogant in shredding his headcount, another recruited from, whisper it, a supermarket - who didn't seem to understand what they were doing, trading, risking, or the exposure of millions of these seemingly little people and their little nesteggs.

Here was a reminder that banks are not just about fat cats. They're not separate from the real economy.

They ARE the real economy, their failings impacting on the lives of real workers, investors and savers.

The telling difference between the meetings was in the power of an apology.

At Lloyds TSB, the patrician Sir Victor Blank, was least willing to concede mistakes, and he paid for it with the most hostile reception.

Why, they asked, is this sound, safe bank in need of a bailout and taking on the HBOS mortgage book, much of that suffering from financial subsidence?

Mixing empathy with condescension, Lord Stevenson was neither happy nor proud to face HBOS's owners, he said.

As a shareholder, he understood, shared their anxieties, there were regrets and, yes, he used the 'sorry' word.

But he antagonised them too, by making out the fault was with a financial tsunami and a recessionary gale - as if the banks were merely the victims of this double whammy act of God.

The Royal Bank's chairman took the link to divinity one step further. Instead of summoning shareholders to the grandiose Gogarburn headquarters, Sir Tom McKillop convened proceedings in the General Assembly hall of the Church of Scotland.

Unlike exhibition centre warehouses and hangars, its solid beams are heavy with the nation's history. And the air was heavy with the nation's judgement.

This felt like a religious rite of contrition or repentance. Sir Tom, a research chemist turned would-be corporate alchemist, appeared genuinely shocked and humbled by his fiduciary failings.

One shareholder even got his departing chief executive, Sir Fred Goodwin - the chief villain of this audacious reverse bank heist - to use the 's' word too.

It was accepted at face value.

In America, financial collapse is a bonanza for litigation lawyers.

But so far in Britain, we seem to make do with a tiny handful of resignations and some grovelling apologies. That, and billions of our pounds at risk.

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• - What's this?

It's always reassuring for a journalist to find it is the weightier matters one reports that get the most feedback.

Recession, for instance, the future of globalisation, or whither Scotland's manufacturing base?

No, none of these.

The issues that get most feedback have so far been declining newspapers ("they had it coming to them"), Scottish independence ("any awkward questions are a betrayal of Scotland") and, yes, the correct spelling of "hullo".

If you look at the brief greeting at the top right of this blog, you'll find me greeting you with a "Hullo, I'm Douglas Fraser..."

It seemed uncontroversial at the time I wrote it, but offline, the feedback has been passionate.

I've even been quizzed about this by the august man from the august Financial Times.

And someone who works for a large American multi-national and who clearly doesn't have enough to do - let's just call her Julie to protect her identity - has been researching this.

The word "hallo", she informs me, is an exclamation of surprise.

"Hello" was invented as a means to answer the phone, while "hullo" was derived from a hunting call.

"I know the economy is constantly full of surprises," writes Julie, "but I wonder if that's really the way you want to greet your loyal readers on your blog."

Well, Julie and others, I've done my own extensive research, even going so far as to look up Wikipedia.

And if it is to be believed, then Julie is partly right, though possibly a bit wrong.

"Hello", it is claimed, pre-dated the invention of the phone, and had come into regular literary use by the 1860s. (It is also the name of a magazine, and I don't do product placement.)

"Hullo" pre-dated it, being used as a greeting or expression of surprise, and turned up in both Oliver Twist and Tom Brown's Schooldays. It's now fallen into much less use, but is found still in British English.

"Hallo" was the hunting call, and goes as far back as Shakespeare's Coriolanus (as in "halloo") and as far forward as Enid Blyton and its comic French format "'allo 'allo".

It's also a greeting in German, Norwegian and Dutch.

So now, duly educated, you have something to discuss over your festive dinner table.

In the meantime, I'm taking this opportunity to wish all blog readers a Murry Christmus.

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• - What's this?

...This wasn't Sandy Crombie's description of himself or of Standard Life, the Edinburgh-based finance house of which he is chief executive.

But he sounds comfortable enough to live with that description, offered by someone else, as he puts out his year end message that at least one of Scotland's big financial players is doing pretty well, despite everything.

He was on the Today programme on Tuesday morning, saying the company isn't actually dull, but "it's good to be reassuring... the market has seen us as rock solid".

Standard Life faced down some quite serious problems over past years, steering its way through demutualisation better than many had expected, and used the resilience in the market to take the pain and bounce back.

"What was evident in 2003 was that this business was running more risks than it had the capital to cope with," the chief executive said.

"Companies can take risks so long as they have a large store of money they can call on in difficult times."

Edinburgh's more thrill-seeking big banks provided bumper profits, but Crombie doesn't leave much doubt that he doesn't rate their methods for doing so.

Black box

He said: "What has gone wrong in these unusual times is that those who have taken the more esoteric risks and tried to do the undoable have found that their business models have just collapsed.

"That causes an enormous loss of confidence.

"Simple, transparent, straightforward and understandable is what people will want in the future."

But hasn't the bank bust and the Madoff hedge fund scandal only undermined the whole sector?

"There's an aura around about some of the providers," Crombie said.

"Nobody knows quite how they do it. It's a bit of a black box.

"You don't know what happens inside it, but you like what comes out of the other side of it - for a while."

Shock waves

He added: "Because you don't know how it's done, you don't know how it could go wrong.

"That's a style of business, a proposition that we want to steer well clear of."

The Sage of Lothian Road isn't sure about the markets next year.

He said he had recently been using the analogy of a tsunami.

"The shock waves occurred 15 months ago now, and it's still not clear if the waters are still arriving or if the waters are receding," he said.

"In some respects, it feels as if the waters are still coming, and we may have to find higher ground.

"I may be excessively gloomy and we may be closer to the tidy up stage than I imagine."

Constrast that with the revelations in Panorama last night, making it clear that October saw the Royal Bank only a few hours from being unable to open its doors for business.

The Bank of England, we now know, had to go to creditors in Japan and the US to plead with them to keep faith with RBS.

On Robert Peston's blog, you can read a full transcript of the interviews, going a long way past the edited, broadcast version, and you can also (in the UK) still see Panorama on iplayer.

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• - What's this?

How best to pump funds into a troubled economy - tax cuts or more spending?

This is not the debate the Tories want to have, which is about the dangers of either more public spending or more tax cutting being funded by a big boost in government borrowing.

This is about a spat between the SNP Government and the Labour Government, in an economic disagreement with political overtones.

Alex Salmond, the first minister, would rather like to have £1bn of extra money to spend, partly to be seen to be doing something in the face of the downturn, and perhaps because there's a lengthening list of public sector capital projects getting delayed by his problems in getting the idea of the Scottish Futures Trust up and running.

A cynic might suggest that a row with the Treasury about £1bn or so in capital spending (when he already has an outstanding claim of around £1bn) is a handy diversion from the pressure over crumbling schools in Edinburgh and the curious plans for funding the next Forth bridge.

The first minister reckons £1bn would be Scotland's share of the £12bn or so that it will cost the Treasury to forego 2.5 percentage points in its VAT takings throughout Britain.

And with some number crunching, his chief economic adviser, Andrew Goudie, has found that an injection of £1bn could deliver or secure around 10,000 jobs, mostly in construction.

By contrast, the impact of the VAT cut on the Scottish economy would amount to about 5,400 jobs saved, the largest share in manufacturing.

Consumer confidence

You can choose to add the jobs created by those people's pay packets getting recycled into the economy, with 4,900 more posts sustained through the capital spending boost or 1,800 jobs through the VAT cut.

A no-brainer then? Darling 5,400, Salmond 10,000? Well, not quite.

Dr Goudie has pointed out that his calculation assumes only half of the VAT cut will be passed on to consumers. The rest will help out company balance sheets. That's also the Treasury's assumption.

If consumers have the full cut passed on, it could result in 10,800 jobs saved.

The chief economist has also put in bold type the observation that capital spending takes time to come on stream, not least in the planning system.

By contrast, the VAT cut - for all its shortcomings - appears to be having some impact on consumer confidence already, and speed seems to be a key requirement of any fiscal stimulus at the moment.

It's worth remembering you can't just put unskilled people to work on building roads, as in the 1930s. Homes, roads and buildings take skilled workers, operating complex machinery.

Some have suggested a high-speed train between Scotland and London, or sub-sea interconnectors, both of which would involve much of the money being sunk in technology and equipment. Little of that comes from British companies.

Boldest lead

Mr Salmond observes, acidly, that Alistair Darling should have done his homework before deciding on his Pre-Budget Report economic stimulus package last month - a £20bn boost, more than half of it in the VAT cut.

But perhaps the Chancellor will take note if he has to come back next year with another package. The International Monetary Fund's chief was hinting at the weekend that the boost may have to be more than the UK Government has so far committed.

In the US, President-elect Obama's team is taking the boldest lead of all, with an $800bn package now being negotiated with Congress - roughly 30 times bigger than Alistair Darling's.

Closer to home, Mr Salmond's assertion that small, independent nations can weather the economic storm better than large countries is now under new scrutiny, with news that the Irish Government has had to find more than 5bn euros to shore up the capital in its three leading banks.

It is reckoned in Dublin that they have a much smarter deal than the British one for HBOS, the Royal Bank of Scotland and Lloyds TSB.

The Nationalists' opponents reckon the case for independence has been fatally damaged by the credit crunch.

Small countries need the protection of big alliances, they say. Not so, comes the pro-independence reply - look at Norway (but please don't mention Iceland).

As the model for much of the SNP's 'Celtic Lion' thinking, it is Ireland's handling of the crisis that will influence that debate most, and the jury on that verdict will remain out for quite a few rocky months to come.

Part of the story will be the problems Ireland is already seeing from its Christmas shoppers taking their euros north of the border to take advantage of the weak pound.

That vulnerability to swings against sterling, its dominant market, would also affect an independent Scotland if it were in the euro-zone.

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• - What's this?

What are we to make of the strange statistics for the Great British shopping habit?

Today, we learn that British retail figures for last month have seen slightly more money going through the tills, compared with October, and an even higher rise, of 1.5% on November last year.

The British Retail Consortium simply doesn't believe the Office of National Statistics data. It doesn't feel like things are that rosy.

Nor does the CBI, which reckons its retail members are more down than up by a 46 point margin.

The BRC put out its own figures this week showing November sales down by 2.6% on the same month last year.

North of the Tweed, the Scottish Retail Consortium this week reported total sales in November were up 2.8% on last year.

But they prefer to refer to 'like for like sales', meaning comparison of the sales at shops that also existed last year.

They are down by 0.8%, the first fall in this downturn, and since August 2008. Non-food like for like sales have been falling for six months.

The breakdown includes, oddly, the sustained popularity of champagne sales. Children's clothes and footwear was doing better than the fall in adults', which are being seen as discretionary purchases rather than essential.

Shoes for work are doing better than those for leisure time, reinforcing a finding a few weeks back that people are smartening up with their job insecurity.

Perhaps with retraining in, brain-training computer games are doing relatively well.

So is the Wii, as the popular Christmas gift. In the health and beauty sector, "bronzing held up for some and nailcare remained popular".

Three points: one, Scottish retail seems to be holding up at least as well as the rest of the UK.

Scotland may be holding up better because its bigger public sector should logically mean less job insecurity, at least in this part of the recession cycle.

Two: it seems odd to stress 'like with like', when it is the intention of the big retailers to draw people into big new shopping centres that weren't there last year. Silverburn, in Glasgow's Pollok area, for instance, is bound to hurt takings elsewhere. Isn't that the point of it?

And three: given the dire statistics coming from every other facet of the economy, shopping overall doesn't seem to be doing all that badly.

Why? Well, the figures hold up well for food sales. Inflation early this year left people facing higher prices for their food.

Inflation is falling, but that doesn't - yet - mean the prices are doing so. It seems people are putting a higher proportion of their spending into food.

It's no surprise to find that big ticket items are in much steeper decline, including furniture and white goods, and particularly fitted kitchens and bathrooms.

People who need credit to purchase them are finding it harder to get any, and everyone is holding off purchases that aren't necessary while facing job insecurity.

Anecdotally, shopping centres can seem as busy as ever. But there's more evidence of what's going on today coming out of retail consultant Experian.

It tries to measure footfall - the number of people walking past shops - and they find it this week down more than 10% on last year, which is a widening year-on-year gap than measured in previous weeks.

It also notes that people are getting more comfortable with internet shopping, suggesting many of these shoppers are browsing the goods on offer, and then logging on when they get home to see how much cheaper they can buy.

That's no way to sustain shops in the high street, of course. And my guess is that this recession will leave high streets changed irrevocably.

Woolworths is going. So is Klick, twinned in 60 Scottish shopping centres and streets with Munro dry cleaners. Zavvi, the music and games retailer, is in trouble.

Who's next? Look for shops that don't have a clear selling proposition when you walk into them. For years, Woolies has seemed muddled about what it's been trying to do.

Then look for those facing changes in technology. Photo developing shops are being undermined by digital printing on cheap home printers.

Fewer clothes these days require dry cleaning and the public smoking ban has made cleaning less necessary for those that do. Music and anything else digitised is being sold far more online.

The very short-term good news for shops is that the last online ordering day is upon us, and last minute Christmas retail, by disorganised people, will have to be the old-fashioned variety.

That includes me.

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• - What's this?

BAA plc - formerly the British Airports Authority, then privatised, and now a Spanish-owned airport operator unloved by delayed passengers, seems to be even less loved by the Competition Commission.

In a drawn-out consultation, the two sides of this debate really aren't getting on too well. Don't expect them to be invited to each other's Christmas parties.

The Competition Commission's second last set of recommendations were published this morning, repeating its requirement that one of the two Scottish central belt airports should be sold off. The claim is that it has been anti-competitive in the way it has controlled Edinburgh and Glasgow Airports.

What's new this morning is that it is arguing Edinburgh should be the one to get sold off.

The argument from BAA is that Edinburgh Airport's customer base is more than 90% from the east, and Glasgow's is more than 90% from the west. It's not the most compelling argument. You could as easily say that it breaks down that way because that's the way BAA has marketed them. Because of its position on the west of the capital, if Edinburgh were marketed in competition with Glasgow, it could pull in more business from Lanarkshire and other parts of west central Scotland.

Glasgow Airport's key weakness is that it is on the wrong side of the Glasgow rush hour. Most people on the east side of the M8 Kingston Bridge are often better off going to Edinburgh Airport. And the building of an airport rail link only makes sense in accessing the wider Scottish market if there is a cross-rail scheme to link Glasgow's Central and Queen Street stations. But last week's Scottish Government announcement on its priority strategic transport project makes it look like cross-rail has fallen off the planning table.

The Competition Commission argument that Edinburgh should be sold off because it has better growth prospects and would raise more money is odd reasoning. There is an argument to be made about anti-competitive practice, but it is a different and much more contentious argument that BAA should be doubly penalised - first by a forced sale, and then by being left with the weaker part of the deal.

While the Commission is also pushing for BAA to sell off Gatwick and Stansted while keeping Heathrow (it already has Gatwick on the market), there's another new aspect to the findings on its ownership of Aberdeen Airport. Operating a monopoly in north-east Scotland, as there's not much point in locating a new airport around the city, it's been found that Aberdeen suffers from under-investment and BAA has been making excessive profits per passenger.

The answer is to reinforce the company's inflation-minus-1% annual increase in landing charges, to help drive down prices to airlines. The bit that is going to hurt BAA, on top of that real terms cut, is a 15% rebate to the airlines on top of that real terms cut. The rebate could be less painful, cut to 12%, once BAA commits to more investment at the airport.

Selling an airport into the current market is not going to be easy. Not many companies have the confidence and cash to buy airports these days. Even if there's a buyer to be found, the price won't be high.

BAA can take some comfort - though there isn't much in this set of recommendations - from the timetable for appeals after the final report is published next March. If that gets spun out enough, the company could hope to delay its forced sales until the market is looking a bit cheerier.

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• - What's this?

In Edinburgh, on a bitter cold day, reflecting on a tumultuous year for the city's financial institutions.

The news that the Royal Bank of Scotland has lost as much as £400m in what appears to have been a spectacular fraud by the Madoff hedge fund in New York had one colleague observing things are so bad for RBS that he's beginning to feel sorry for it.

When people criticise the bank, it might worry, but when they feel sorry for it, things really have come to a pretty pass.

Looking down the Royal Mile, it looks less tumultuous for Holyrood politics. Economic events have meant that the Scottish Parliament has ceased to be the focus of events, and the pivotal point of debate, for perhaps the first time since its current incarnation began nearly 10 years ago.

The obvious explanation is that it lacks the economic and taxation powers to do much in the face of the global tumult. But it is notable how muted is the SNP Government's argument these days that it would want them. Would John Swinney really want to be in the same position as the Irish finance minister in announcing a £9 billion recapitalisation of his nation's banks?

But while Westminster seems to have the power to make decisions on Britain's economic future, that may be something of an illusion. "Being in control" is a relative concept, and the Bank of England and the Treasury are closest to it. Parliament can ask questions but looks weakened by the scale and speed of events.

Indeed, neither centre of political power looks in control of events, and looking to the new year, both could look puny when compared with the scale of the economic storm raging around them.

This next year looks like shifting the political-economic nexus from treasuries and bailouts to the political and social fallout from recession. Politicians will have to deal with the pain being inflicted on their constituents, and will have to get used to the cry: "Well, if they can do it for the banks, why not for us?"

There are few convincing answers. "Not enough money," doesn't seem much of an answer when UK borrowing will be up three-fold - at least, from a worryingly high starting point and, no doubt, with more bail-outs yet to come - and the combined governments' response to the crisis is somewhere in the region of 1.5 trillion US dollars.

The challenge is to get the balance right between seeing recession as something that inflicts pain and dislocation of some sort on almost every home in the country, and seeking to respond to it that way, and on the other hand recognising that the big longer term pressures may be gathering elsewhere, sometimes a long way off, but building up a storm that will hit us all in different ways.

A geo-political rebalancing is already taking place. Of all the extraordinary events that have taken place in recent months, one that stands out as having the biggest implications for the world's future was the G20 gathering in Washington last month - not because of anything it achieved, but because it pointed towards the need of the US and Europe to recognise the emerging powers as not just economic but political partners and, perhaps sooner than we realise, as equals.

So, while the future of Edinburgh banks and Merseyside Vauxhall car plants will concern many, there is a link to millions of Chinese people returning to their villages from the industrial belt, taking the potential for social unrest with their frustrations.

Russia was strutting its energy power in mid-summer, but is now having to explain to its people why its public spending has gone haywire. The international implications of its insecurities are rarely comfortable.

Tensions are already becoming clear within Europe, particularly around Germany, over the need and scale of reflation.

The strong euro could be bad for British travellers to the continent next year, but it is a whole lot worse for the Irish, many of whom sell into the British market.

And with massive flows of migration a feature of the global economy in the good times, new patterns - some of them troubling - will arise in the bad.

The brightest prospect in the year ahead is surely the inauguration of Barack Obama, elected on an electoral wave for change. But the change is happening all around him and it is not the variety of his choosing.

January 20 on the Capitol steps in Washington looks like being the eye of an economic hurricane.

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• - What's this?

A final observation from Birmingham on Friday, where a few HBOS shareholders gathered to vote through the ...

After the Scottish-based attempts to derail the buy-out, it was striking how few Scottish voices were raised at the meeting.

From Jim Spowart, Sir Peter Burt, Sir George Mathewson and Malcolm Fraser's Merger Action Group, they had done their campaigning in private and in public.

They had done what they could, they had failed, and they couldn't see the point of a train fare to the English Midlands.

But there were voices raised - and with strong English accents - about the loss of the Bank of Scotland's traditions.

One of them, with the strong tones of the English Midlands about him, pointed out that Lloyds Banking Group plc, as it is to be known, will have the right to print Bank of Scotland notes, so why shouldn't the new entity be known as "Lloyds and Scottish Bank Group"?

The answer from Lord Stevenson, the HBOS chairman, said it wasn't for him to determine. It was entirely up to the Lloyds TSB bosses.

This was perhaps the most striking answer of his two hours in the spotlight, demonstrating the weakness of HBOS's position in negotiating this "merger" of the two high street giants.

If he couldn't even negotiate on the name, he wasn't able to get much else for his shareholders other than a rescue.

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• - What's this?

I'm in Birmingham for the HBOS shareholder meeting, which looks even more certain to back a takeover by Lloyds TSB as a result of alarming news out this morning.

To update markets on its latest trading position, the Edinburgh-based bank's bosses have said their assumptions about losses have become significantly worse in the past two months.

There's no surprise that the mortgage, car loan and credit card losses are bad and looking worse.

Secured lending, mainly in homes, was in £400m of trouble two months ago. That's now at £700m.

Unsecured loans faced £800m losses this year. They're now assuming that willl be £1bn.

The most concerning figure is for businesses that look as if they won't be able to pay back their HBOS loans. At the end of September, losses looked like £1.7bn. Two months later: £3.3bn.

That's not just a sign of risky lending by HBOS. It's a bellweather for the state of British business.

It's very grim, raw day in Birmingham.

UPDATE: 1155 BST

Halifax Bank of Scotland chiefs have apologised to shareholders for the crisis facing the company, as its owners vote today on the takeover by Lloyds TSB.

Lord Dennis Stevenson, the HBOS chairman, spoke of a financial tsunami and recessionary gale raging. He said the bank had taken a considerable battering and that he was neither happy nor proud to report on the falling share value.

Speaking as a Scot, he said the loss of Halifax Bank of Scotland independence was "rather painful", but that it had been up to Lloyds TSB bosses to name the new company Lloyds Banking Group.

Shareholders at the meeting in Birmingham attacked the board for "reckless" decisions, failing to understand what they were trading, for being "a disgrace" for losing billions in the bank's value, and they were challenged to pay back their salaries and bonuses.

Lord Stevenson said bonuses had not been like some other banks and that HBOS had not taken the same risks as others on the US property markets.

The meeting followed a report to the stock market showing HBOS is assuming much worse figures for its debt exposure, particularly in loans to businesses.

This nearly doubled to £3.3bn in only two months to the end of November - a sign of the severity of recession now spreading from banks to the wider economy.

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• - What's this?

In a world awash with dreadful economic statistics, here are some that stand out as particularly alarming.

It returns to the roots of this crisis - the American property market. And it shows that the destructive potential from its collapsing pile of debt is far from finished, particularly as it feeds through into job losses.

Remember that Britain could see as many as 75,000 people facing repossession of their homes next year.

Now consider this: the US Mortgage Bankers' Association has said that almost 7% of mortgage loans were in arrears in the third quarter of this year, and nearly 3% are going through the foreclosure process.

In Florida, the worst affected state in the nation, foreclosure is running at 7.6%.

That translates into the estimate that 2.2 million American homes are facing foreclosure and repossession by the end of this month.

Now consider this: these figures cover the period before the stock market and banking system tipped over the edge in early October.

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• - What's this?

The Scottish Government set out last year with its central "Purpose" - the focus of all its activities - to match UK and European growth rates.

Now, with times radically changed, it seems the goal is to avoid matching their decline.

This is the drastically altered context for the Council of Economic Advisers, set up last year by Alex Salmond soon after the SNP took power at Holyrood, to publish their first annual report.

It doesn't take the finest economic brains to share their conclusion that the outlook is "unusually challenging and uncertain", as they note the unprecedented speed at which downturn has gathered pace.

Chaired by former Royal Bank of Scotland boss Sir George Mathewson, the report puts stress on some of the issues advisers have considered in detail over their four meetings since September last year.

That includes the need to change the culture of the planning system. Legislation, which has been a long time coming, should soon begin to make an impact on that.

The report points to familiar problems with Scottish productivity, both labour and capital.

Scots are working harder, but earning less, goes the analysis.

That's seen as the "branch office problem", whereas London's headquarters operations provide jobs with more value added.

Dig deeper, read between some lines, and you can find some interesting debate going on.

On nuclear power, the economic advisers have a strong tide of scepticism running against the idea that renewables can provide for Scotland's energy needs after Hunterston and Torness are retired - at least if Scotland is to meet ambitious climate change targets.

There's a warning that "outages may become more frequent" as current plants age, and "on present trends, that will result in the burning of more fossil fuel for replacement power generation".

The economists recommend the Scottish Government should commission "an independent assessment of the full economic costs and abatement potential of the various energy options open to Scotland", and a wide-ranging public debate on the range of technological options.

The warning is that the decisions being taken in the next few years will have a direct impact on economic growth.

It looks like a pretty clear push to re-consider the veto on new nuclear, which is what the business lobby groups have also been saying.

Then there's the future of infrastructure funding.

There is a critical assessment of the constraints of devolution in capital expenditure, and the Public Finance Initiative is criticised for imposing constraints on future government spending.

But while saying they welcome other ideas, there's a vagueness about the government's plans for a Scottish Futures Trust.

From what we know if it, this would operate the same way as PFI, in imposing long-term costs on public sector budgets.

The only difference looks like the level of profit that can be extracted.

We should hear more about that next week, with Finance Secretary John Swinney due to outline his priorities for strategic transport projects up to 2020.

That plan will be dominated by the cost of the new Forth bridge, and we ought to find out what mechanism he intends to use to unlock the necessary billions.

The clearest challenge to SNP government policy from Alex Salmond's Council of Economic Advisers is on university funding.

Several of its members work in universities, so you might say this looks like a vested interest.

But they are clear that the Scottish Government has to look to Scottish students to contribute to the cost of their education, as well as alumni.

This runs contrary to ministers' proud declaration that the abolition of the graduate endowment has ensured Scottish education is free.

But at what cost to economic prospects? If the sector is limited to a fixed budget, the Council argues there are going to be compromises on the participation rate, on the level of attainment of the student population, or in quality - and potentially in all three.

So it is argued the government has to be clearer about whether it can expect Scottish universities to be world class, or if it is more realistic to focus on securing that status for individual departments.

That comes with a proposal that ministers have to find agreement with universities about future strategy and the scale of the sector, and they should be clear what they expect from universities' collaboration.

They propose a re-design of Scotland's four-year degree, into two sections of two years, alongside more localised access, similar to the initiative at Dumfries's Crichton campus.

The tone of the report is that this is one issue on which the Council of Economic Advisers could provide cover for a re-think of higher education policy.

"As countries elsewhere are finding, squaring the budgetary circle of higher participation, higher levels and higher quality is very challenging," they report.

"It calls for a greater diversity of institutions, and managing this process is extremely difficult."

The analysis is in line with a warning from Universities UK, which represents vice-chancellors and principals.

The organisation reckons Scottish institutions (and Welsh and Northern Irish) are at risk of losing competitive ground as English institutions gain from the extra funding that comes with top-up fees.

With England soon to review the £3,000 cap on its fees - and with pressure on Whitehall ministers to let the market dictate levels, allowing much higher rates for prestigious campuses - it's a safe bet that this issue is going to become more prominent in the new year for Scottish Education Secretary Fiona Hyslop.

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Back to the troubled state of Scotland's newspapers, on a .

Of 240 journalists across the Herald, Sunday Herald and Evening Times titles, almost all of them are being made redundant and told to apply for new jobs.

About one in six of them won't make it through the sift, which is intended to take only about a month.

Don't expect much festive cheer at the Glasgow headquarters.

It's no surprise that change is afoot.

Circulation across the three newspaper titles has been falling.

Advertising revenue is in real trouble, as the papers depend heavily on jobs, homes and car ads - all three sectors taking a fierce hit from the economic downturn.

Even without the same commercial pressures, there's change also at ´óÏó´«Ã½ Scotland, where 20 journalist jobs are to go in the next few months - but without the same shock tactics.

For papers, those in search of news coverage are increasingly going online, where advertising revenue has been rising fast, but that growth has slowed with the onset of recession.

And a rule of thumb for advertising revenue is that one reader of the paper is worth about 100 online, so newspapers have to work hard to make up the ground they're losing with falling print sales.

But the journalists' union - and it's well represented at The Herald - points out the papers remain cash cows for their owners - Newsquest, the British subsidiary of Gannett, an American publishing giant.

Staff complain that not enough of that cash has been ploughed back in to investment.

The announcement of redundancies has come on the first day in post for Donald Martin as editor-in-chief of the group and editor of The Herald.

He has been boss at the Evening Times for almost three years, and was editor of Aberdeen's Evening Express before that.

Charles McGhee quit as Herald editor in summer, apparently fed up with the cuts being imposed, but indecision about choosing his successor delayed his departure until yesterday.

He was the fourth consecutive holder of that post to leave under the shadow of continuing rounds of cuts.

Long respected as one of the most significant jobs in Scottish public life, it doesn't look that attractive these days.

Very few people knew the redundancies were coming.

It seems the plans were drawn up by top managers at the start of this week, leaving genuine shock in the newsroom when staff were briefed today.

Only "a handful" of staff - five or six - have their jobs secured.

Among them, the Sunday Herald editor, Richard Walker, is expected to become weekend editor, covering online and both Saturday and Sunday papers, while the most senior posts in online are also safe.

The official line is that everything else is fluid and flexible, as the new editor-in-chief figures out how to deploy the new jobs by combining across three titles, round the clock and over seven days.

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Today, it's the turn of Bank of Scotland to try to get back on side with its 180,000 small business customers.

Rather a lot of them seem a bit scunnered at the imposition of sharp increases in banks' interest rates on their overdraft and loan facilities, along with heavy charges even for making the changes.

No more, says the Bank of Scotland business end of the HBOS empire.

There will be a guarantee that the charges and conditions on loans will be held for at least 12 months.

Its likely future merger partner, Lloyds TSB, has made a less specific pledge to maintain overdraft limits and margins at existing levels for SME customers, and to agree to any reasonable request for short-term finance to support any viable business through temporary difficulties.

But before rushing out to celebrate, customers might like to take a look at the small print.

The HBOS guarantee only applies to newly-arranged loans, and there is no mention of lending facilities that are already in place.

There is a promise that the bank's interest rates will track the Bank of England base rate rather than the Libor, London inter-bank offer rate, the price at which banks borrow from each other and more closely reflects the real costs of HBOS raising money.

That's good news for customers. But to say that they'll track the base rate is not to say they are guaranteeing to be anywhere close to it.

Libor is also tracking the base rate, but a gap between the two stubbornly remains.

Bank of Scotland has also announced that it's negotiating with the European Investment Bank to provide loans to small businesses.

This would be at up to 80 basis points below the standard lending rate.

The fund is expected to be 250 million euros, out of a £4bn fund the EIB is making available for British lending. It seems rather modest next to the announcement by HBOS's subsidiary in Ireland that it is setting up special funds worth 1 billion euros to help Irish businesses through recession.

A tenth of that is already committed to helping the hotel industry and as much again for first-time buyers.

And all this is announced a few hours before the Government was expected to set out plans to force the banks to stand by their current voluntary code of lending practice.

On interest rates, it's expected tomorrow that the Bank of England's monetary policy committee will cut its base rate below 3 per cent, following the 1.5% cut last month.

The market has priced in a 50 basis point drop, but there would be no surprise at a full 100 points to 2% - the lowest rate since 1951.

Anything more than a full one per cent cut would take interest rates to their lowest level since the base rate was first set in 1694.

But the crucial element of getting people to respond to lowered interest rates is what people's expectations are of where they will be in future.

And a newly-published Lloyds TSB survey of public sentiment, taken last month and covering more than 2000 people, has some findings that suggest interest rate cuts may not cut much ice with increasingly cautious consumers.

Forty per cent of people reckon interest rates will be higher by this time next year, against 30% who think they will be lower.

And with markets assuming a sharp decrease in inflation, with the risk of deflation, that's not where the public mood was in mid-November.

Some 58% think prices will be up in 12 months time, while 12% think they will fall.

Perhaps the most astonishing finding from the survey was that it found 3% of people who think British employment prospects are brighter than they were last year.

Who can these people be? Eighty-three per cent were aware that things are worsening.

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Having a 58% share of the Royal Bank of Scotland, we should be taking a close interest in how our investment is getting on.

We already know the bank is trying to get back on-side with public, customer and political opinion.

What is less obvious is the emerging challenge from its debtor companies getting into financial problems. Some are close to home, but such is the reach of RBS that its financial web spreads wide.

Two large companies in Italy are reported to be in talks with their banks over re-scheduling debt.

One is the country's Yellow Pages company, Seat Pagine Gialle, which has somehow run up debts of three billion euros, and half of that is owed to RBS. It announced on Monday that talks with the Scottish bank have begun and should conclude this month.

Another is Carlo Tassara, the holding company of French-Polish tycoon Romain Zaleski, with more than five billion euros of debt, used to buy a portfolio of blue chip investments which have taken a big tumble on stock markets.

It is reported as having to sell of a 3% stake in Italy's largest bank, and take an interest payment holiday on its loans from two Italian banks, in order to pay off a 1.3 billion euro credit line held by RBS along with BNP Paribas.

RBS is reluctant to talk details on this. Having been active in the derivatives market by which such investments and loans were insured, it may be protected from these companies failing.

But the problems in Milan are a reminder of the exposure of such British banks - and their government/public shareholders - far beyond these shores.

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Just when you're supposed to be out spending and helping to refloat the economy, it seems the Great British are discovering the virtues of saving instead.

According to a survey commissioned by Standard Life and carried out in October, the proportion of people who say they are actively saving or investing for their future rose over the previous six months by 10 points to 58%.

Those saving regularly are up to 43%, rising by 9 points in a quarter, while another 29% save whenever they have spare cash. Those figures don't add up, of course, but whoever said the Great British public had to make any sense when confronted with an online pollster?

The catch is that people are finding it harder to save, even if they want to. In January this year, 23% of people in the 1500-strong sample of the British population said they save less than they were saving a year before, but that rose to 37% by October.

The background to the savings figures is the grim public view of what the survey measures as "consumer sentiment towards various saving and investment categories". Across a basket of measures, that has entered negative territory for the first time since the Standard Life Savings and Investment Index began in July 2005. It peaked two years ago, when positives outweighed negatives by 23 points.

The Royal Bank of Scotland is trying to turn some big negatives into something at least slightly more positive, with its promise to lay off mortgage defaulters for at least six months.

With that comes an interesting article by new chief executive Stephen Hester in the Financial Times today. He's complaining about attacks on banks being "an easy way to a populist headline". And while he admits the banks have brought those attacks on themselves, and should admit to their mistakes, this is an unusual plea for the rest of us to be more understanding of banks.

The economy needs healthy banks, says Mr Hester. Yes, there will be human errors in the future too, both when RBS says "yes" to people as much as when it says "no". But the increases in customers' borrowing costs are because of the steep increases in the bank's own borrowing costs. And, he argues, there is a need to balance the needs of creditors with the requirements of savers.

Perhaps the most imaginative reckoning for the £20bn of taxpayers' capital injection that keeps his business in tact is that RBS has paid £15bn in taxes over the past 10 years. It seems a mega-bailout is the least it can expect in return.

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