Here is a consoling thought, as you ponder the implications of the first government takeover of a British bank in a quarter of a century. It must be a measure of a sort of progress that nationalisation by a Labour government is regarded today as an excruciating embarrassment, something to be resisted at all costs.

Younger readers may not know this, but it wasn't ever thus. Back in the 1960s and 1970s, nationalisation to Labour was like communion to a regular churchgoer: a public affirmation of the faith as well as a source of vital spiritual nourishment.

Now, it is a mark of shame. It is all done under cover, hugger-mugger, backs against the wall, an air of humiliation about the place. It is a miserable little deal cobbled together in the quiet of a Sunday afternoon, accompanied by loud assurances that it will be temporary and perhaps even profitable.

I am not normally one to defend the Brown-Darling economic management record, but I am viewing these events from Washington, where economic competence is hardly in oversupply these days. And I am always suspicious of a pile-on, especially when it is done by opposition politicians seeking to make capital.

I worked for the Bank of England during the previous nationalisation of a British bank. In 1984 the central bank acquired Johnson Matthey Bankers, the banking arm of the famous gold trader, for a pound after it had failed to get a consortium of clearing banks to take it over. (There was some amusement on the day of the deal, when the Governor tried to hand over a pound note to JMB's people but was told by the lawyers that it was only a promissory note and that it would be better if he had some real metal. He duly fished two 50p pieces out of his pocket.)

That occupation of a small but not insignificant part of the commanding heights of the economy was carried out when that famously Marxist duo, Margaret Thatcher and Nigel Lawson, were in charge of the nation's economy.

So we should remember that just because something is necessary does not mean that it is desirable, nor that it represents some hidden ideological agenda that could weaken Britain's standing as a dynamic capital market.

Competence, however, is a different thing. Is it reasonable to fear that the latest episode has hurt London in the eyes of the world?

I suspect that most people with an interest believe that the nationalisation of Northern Rock was the only plausible remaining choice, given the errors of the past few months. It represents a kind of inversion of Winston Churchill's line about Americans - the Government managed to do the wrong thing in the end, but only because it had exhausted every possibility of getting it right.

But something had to be done. And it is not entirely fair to suggest that the UK has been uniquely hurt by the financial crisis of the past year because of some misjudgments by the authorities.

The inescapable fact is that, though it once seemed to be principally a liquidity issue, the sub-prime mess has ripped very large chunks out of the capital of the global banking system. This could have been avoided - and probably should have been - but for the time being the question is how do you plug those holes without producing the sort of systemic, escalating collapse that financial systems are prone to?

No major country - not Britain, the United States, nor any in Europe - has been able to fill the gap with purely private sector financing. So public money has had to do the job. Over here in the US, the chosen solution seems to be the financial comfort of strangers.

Merrill Lynch, one of the grandest names on Wall Street, is now part-owned by the Government of Singapore. Citigroup, America's largest bank, now counts as its largest shareholder the Abu Dhabi Government's investment arm. Morgan Stanley, the blue-chip investment bank and now provider of much of Tony Blair's income, recently sold a 10 per cent stake in itself to the Chinese Government. The list is not confined to Wall Street, either - UBS has taken the same route down the global path.

The evidence so far is that these sovereign wealth funds are behaving merely as passive investors. They insist that they have no interest in managing these companies, nor in using their stakes for any purpose other than maximising financial returns.

If you are going to end up with a government bailout of some of your biggest banks, a lot of people would think it better to have your own government do it. But what will it portend for us if events prove that we might actually be better off in the hands of foreigners than in the grip of our own governments?

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