Happy days are here again, The skies above are clear again, So let's sing a song of cheer again, Happy days are here again.

The outlook seemed ominous for a moment, as a cloud the size of a man’s hand passed across the face of the sun. But panic’s over. Gloom has gone. We have emerged from the fleeting shadows of begrudgery and blame on to the sunlit uplands of optimism once more. Banks for the memory! Bonuses are back!

On Monday, Chancellor Alistair Darling, heading in to a Whitehall meeting with senior bankers, furrowed his brow for the cameras and wondered how the banks could justify hiking up the costs of lending to depositors and small businesses when their own borrowing costs had sunk to zero.

It is because they can, Chancellor, because they can. Take the Royal Bank of Scotland. Which you already have. The RBS was saved from the recycling centre last October when the Treasury pumped in billions of taxpayers’ money. Some 70% of the bank is now owned by the State. Readers will recall Government spokespersons sternly explaining that they shared in the anger which had engulfed the land that the mass of the people were being made to cough up for the |greed-fuelled excesses of the fat-cat few.

The “culture” of the City would have to change drastically.

The Government would brook no resistance to the tough new regulations which would now be imposed.

The revelation that bank boss Sir Fred Goodwin had scampered from the wreckage with a £700,000-a-year pension stuffed down his trousers caused particular outrage. (In fairness, Sir Fred agreed in June that 15 grand a week was pushing it a bit and accepted a reduction to just over £7,000 every seven days for the rest of his life, plus a lump sum of £2.7 million. Commented Mr. Darling: “I think that Sir Fred is doing the right thing.”

The Chancellor can see nothing amiss, either, in Goodwin’s successor, Stephen Hester, now being awarded an ‘incentive package’ of £9.6 million. The State-owned bank will have to meet certain performance targets for Hester to pocket the money, he has explained. So the deal represents ‘long-term’ value for the taxpayer.

The theory here, as we have noted before, is that people earning, so to speak, loads of money, have to be promised loads more to encourage them to get out of their beds in the morning. Down where the rest of us live, workers are incentivised to do what we are paid to do by being promised the sack if we don’t. Or even if we do.

Even Tory Shadow Chancellor George ‘Burlington Bertie’ Osborne has now described the Hester’s deal as ‘a one-way bet which smells of the old-style City’.

Understandable, then, that the banks, having worn diplomatic expressions of contrition for 10 minutes or so, are now sniggeringly scornful of those threats of tighter regulation.

So the chap endorsed by New Labour as the most appropriate to make recommendations on a new regulatory regime was Sir David Walker, a pillar of the City establishment, ex-chairman of Morgan Stanley.

He’s come up with a number of suggestions which have |widely been described as timid but which, some of us reckon, might more accurately be characterised as laughable. But it’s the banks who are bent double in derision.

The Financial Times, under the headline ‘Bankers Hit Back at Walker Review’, reported: “Commenting on Sir David’s recommendation that financial groups should disclose, in a series of bands, how many staff earn more than the boardroom average, the chief executive of one investment bank said that Sir David had caved in to populist demands. ‘What purpose does this actually serve?’ the CEO asked. It is fundamentally wrong to whip up this hatred of bankers.”

It’s not only in Britain that the bankers have rediscovered their swank and their swagger. The front-page in the FT on the Saturday before last announced: “US Banks Unleash a Wave of Optimism”.

Goldman Sachs — nicely described in the current issue of Rolling Stone as a ‘vampire squid sucking the face of humanity’ — has set aside $11.4 billion for ‘employee compensation’ (bonuses) for the first half of this year, suggesting an average (average!) payoutof $770,000. And insurance giant AIG wants to distribute $250 million to senior employees in its Financial Products Department.

If there were Oscars for arrogance, AIG would sweep the board. It had to be bailed out to the tune of $182 billion in taxpayers’ money last year after the financial products it was dealing in — bundling, packaging, buying, selling, swapping, betting on and betting against chunks of debt that nobody knew the size of — turned out to be worthless.

But that was, oh, weeks ago. As far as AIG, Goldman’s, RBS, Anglo Irish and all the rest are concerned, it’s time to put all that unpleasantness in the past. The schmucks and chumps have come up with the cash. Time to get back to business as usual. No need to feel chastened, no need for change.

Altogether shout it now

There's no one who can doubt |it now

So let's tell the world about it now

Happy days are here again.

Capitalism.

Mad, isn’t it?