It really is beginning to look like the UK is going to be hit worse by this than the US, with Gordon Brown unveiling a new bank bailout, one which, shocker, requires the banks to lend the money out again, imagine that.

I would imagine that the catalyst for this action was that Royal Bank of Scotland posted a £ 28 billion loss for 2008.

Even more than the US, the UK seems to have banked on (pun not intended) finance being the future of their economy, and they are suffering as a result.

Spain, which created a boom on real estate, is doing worse with S&P cutting the rating on its debt from AAA to AA+.

The downgrades to countries like Spain, Portugal, Italy, Greece, and Ireland are throwing a monkey wrench into the vision of the Euro Zone as a unitary institution:

Diverging bond yields hurt [Euro Central Bank President] Trichet’s argument that the ECB’s inflation-fighting mandate ushered in an era of stability for nations that once suffered rampant price growth. They also make it tougher for the ECB, which cut its key rate to a record yesterday, to set one benchmark for all 16 euro nations. That may delay recovery as governments try to fund stimulus plans.

Autos are not great either, with France talking about a partial takeover its car makers in order to bail them out, and GM at risk of defaulting on its recent government loan, because it cannot find enough debtors to swap debt for equity.

Likely, the sticking point here is PIMCO, the worlds largest bond fund, which has just been hired to manage a Federal Reserve facility, so they are extorting GM, while at the same time, they are being paid to manage the Fed’s attempt to fix the problem of frozen credit.

It’s nice when you can generate demand for your services without having to deal with the market, I guess.

Meanwhile, in currency, the dollar was stronger today, largely on the UK bank rescue, and the Ruble continues its slide.

In energy, oil is down, largely on the end of Gaza fighting and the Russian-Ukranian gas deal, and retail gasoline is up again today.

I don’t expect it to go above $4/gal soon, but I think that sub $2/gal gasoline will be gone shortly.