The August and September bank holidays are supposed to usher in the start of Christmas, but this year they will be remembered as the beginning of the end of the financial world as we once knew it.

With America's big banks in meltdown, HBOS's future hanging in the balance and Bradford & Bingley now on a shoogly peg, the news from the White House this weekend just has to give us some glimmer of hope.

The Dow Jones ticked up on Friday, indicating that the markets expect a deal in Washington. Frankly, the alternative is too grim to contemplate, but nothing can be taken for granted in this climate.

The contagion has spread over here and a British solution akin to the US Treasury's bailout plan is backed by Gordon Brown and may have to happen in order that the toxic debts are taken aside and the banks can start lending to each other again.

Back in July, and following the withdrawal of Texas Pacific Group from a bid for Bradford & Bingley, this column said that "with the banking sector still deep in crisis the last thing it needed was another Northern Rock-style embarrassment".

Well, it has just got one. And it looks as if two crashed banks will now be rolled into one nationalised entity.

Bradford & Bungle's disappearance would mean the last of the former building societies that turned into banks would have lost their independence. Some, such as Woolwich and of course Halifax, were swept up in mergers.

But the storm blowing through the financial system has spelled out the need for an urgent response before the disease spreads further into the real economy.

As we report on page one today, Stuart Green, chief economist at HSBC, believes inflation will remain high and that will reduce the scope of central banks to cut interest rates. That may require the Monetary Policy Committee and the Government to rethink their 2% target to avoid a deepening slump.

At last, a breath of life for ailing SMG shares

SMG was one of only a handful of Scottish companies to see their shares rise on Friday, and by an impressive 7.3%, which should cheer its long-suffering shareholders.

The rise was due to the buyback of up to £30m worth of shares in a tender offer designed to kick some life into the stock.

The offer involves a share consolidation that should help liquidity.

Shareholders receive one new SMG share for every 20 existing shares effective from Wednesday, and the company will be renamed STV Group.

Chief executive Rob Woodward is understood to be deeply frustrated that the shares have languished for months despite the company's restructuring.

In normal circumstances Woodward would have been rewarded for offloading under-performing assets, paying down debt, sorting out the covenants, and introducing new money-spinning formats.

But these are not normal times, and while the company is not exposed to the turmoil in the financial sector, it has been held back by it.

A magic bullet for HBOS? Doubt it

BACK on the banking beat, this week will see the first meeting of the mysterious group of Scottish financiers who, as revealed below, will be joined by a couple of high-flyers from London to discuss options for breaking up Lloyds TSB's bid for HBOS.

MSP Alex Neil, who has organised the meeting, refuses to name names, though it's not difficult to work out who may be among the half dozen key figures attending. What they can realistically achieve is quite another matter. There is talk of raising £6bn to buy out Bank of Scotland, though Neil says the number never came from him. And what about the billions more that would be needed to fund it? While he feels duty-bound to "do something" to ensure Scotland retains a key role in any merged group, he admits that any break-up bid is a long shot.

In the absence of a rival offer, Lloyds' favoured son Archie Kane, chief executive of Scottish Widows, must be a front-runner to take on the role as the combined group's Scottish supremo; though watch out for Helen Weir, head of retail banking and a rising star.