A headline today in the British newspaper, The Independent, reads "The United States of America, 2008, the Great Depression." It's dramatic, sure. The story itself is about the record number of Americans now receiving food stamps, 28 million, but the headline caught Day to Day's attention. How does the rest of the world view what is happening here? Chris Giles is economics editor with the Financial Times in London. Chris, welcome to Day to Day. How much are you following the American economy? How important is that there?

Mr. CHRIS GILES (Economics Editor, Financial Times, London): It's extremely important for two reasons. First of all, because America is still the most important economy in the world, and though the old cliche, that if America sneezes the rest of the world gets a cold, is not really true any longer, it certainly matters for the rest of the world. We are interested in it. But secondly, because the banks in the rest of the world have a lot of U.S. assets on the books, and it's those assets that are causing problems for those banks. And then that's transmitted to consumers and companies in Britain, in Europe, in the rest of the world. So we're very, very interested.

CHADWICK: Well, we've just heard talk from our correspondent Adam Davidson about the prospect of global regulation for a global market. How would that go down in the U.K. and in Europe?

Mr. GILES: Well, the idea would go down very well because, in London in particular, we have a huge number of foreign banks and not very big U.K. banks, and it's the big financial center for Europe. So we know that we need to have an input into the regulation and the supervision. When it comes down to the details, it gets more difficult then. The principles, which I think are relatively easy to suggest, that U.K. authorities and U.S. authorities need to look at big banks, let's say like Lehmans and Goldman Sachs, which have very big presences in both countries. Now, a lot of this already happens, actually, but at an informal level, so the U.K. Financial Services Authority certainly every year will talk to the SCC and the Fed about specific institutions. But that might need to be much more formal in future, as banks are essentially global, but regulation is still local.

CHADWICK: Let me ask you about your housing market. What's the housing market like there in Britain and specifically London, which is supposed to be one of the hottest and most expensive markets in the world?

Mr. GILES: Now, house prices have risen very, very sharply in recent years. Over the last ten years, they've gone up more than three times in value. At the moment, the house prices have begun to fall, just gradually, so we feel we're about a year behind where the U.S. is.

CHADWICK: If you think you're a year behind the U.S., you know the talk here is all about the recession

Mr. GILES: The talk here is, there's worry that we might be in recession later on this year or early next year. Now, that's not the consensus view at the moment, it's not what most people think is most likely, or even the authorities expect the U.K. economy to slow and slow pretty sharply. At the moment, the consensus view is that the U.K. will pull through and partly the very rapid fall of the pound sterling might help our exporters. We're a very small and open economy in that respect. But there's definitely a risk, and if the financial markets continue to have a very difficult time and the U.K. economy, which is not that dissimilar from the U.S. in that households haven't been saving very much and house prices have been very high. So if we get a similar sort of crunch and a vicious circle, we might be where you are in about a year's time.

CHADWICK: Chris Giles, economic editor of the Financial Times with us from London. Chris, thank you.

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