Investment banks are going to have a lot of explaining to do. After the lows of 2008, and despite the mauling they've had from politicians and the public, 2009 is going to be a bumper year for those that lived to tell the tale. The banks have pocketed an incredible $16 billion in fees in the second quarter, according to Thomson Reuters first half data on deals and fee income, released on Friday. Click here for related news.

True, this is down from Q2 2008, when fees were almost $24 billion. But it should not come as a surprise to anyone who has been watching -- often in disbelief -- the huge amount of capital raising that has been going on in both the equity and bond markets.

Take the bond markets, where total first-half issuance -- excluding financials -- has already reached $598 billion, outstripping previous records for an entire year. If anyone pretends it has been tough selling these bonds, don't believe them. The sales teams have been pushing at an open door, with fund managers buying anything they could get their hands on. The fees are good and so far this year, the risk has been limited.

The ones to suffer have been the loan desks, with syndicated lending hitting a 13-year low. But since this market has always been seen as a loss-leader to help sell other products, there are probably fewer tears being shed at the top of the banks involved.

The UK government's reaction to EU proposals on financial regulation will provide a "potential watershed moment" for UK-EU relations, argue Sir Brian Unwin, ex-president of the European Investment Bank, and Graham Bishop in a June report published by the London-based Federal Trust.

Unwin and Bishop analyse two major contributions to the policy discussion on financial reform in Europe - the de Larosière report and the subsequent European Commission communication - and compare them to their British equivalent - the Turner report.

The Turner report "anticipates much that is contained in the de Larosière report and the Commission's communication," write the two experts. But the report responds differently to whether we "need more Europe or less Europe," they assert.

Although the de Larosière report advises the EU not to "centralise for centralisation's sake," it does advocate "more Europe", according to the two experts, and "it is on the question of supervision at the European Union level that the de Larosière report most significantly differs from Lord Turner's thinking".

Oil giants will be forced to tussle for contracts worth an estimated $16bn (£9.7bn) live on Iraqi television in a bizarre contest they fear could end up resembling a game show.

More than 30 energy companies, including BP, Shell and ExxonMobil may be forced to make last-minute alliances and reveal their offers in a tense round of bidding due to start early next week.

The scheme appeared to come as a shock to some of the major oil companies. Others admitted they "had an inkling" that Baghdad would conduct the process in the open but had not expected a televised spectacle.

The economic crisis, which has claimed more than 5 million jobs since the recession began, did not strike the entire country at once. A map of employment gains or losses by county tells the story of how those job losses first struck in the most vulnerable regions and then spread rapidly to the rest of the country. As early as August 2007, for example--several months before the recession officially began--jobs were already on the decline in southwest Florida; Orange County, Calif.; much of New Jersey; and Detroit, while other areas of the country remained on the uptick.

Click through for the map.

Central banking as partisan politics

First, such mergers and acquisitions re-enforce the survival of the fattest syndrome that has turned banks and shadow-banking institutions into monsters of perverse incentives for excessive risk taking.  Throughout the north-Atlantic region, concentration and monopoly power in the banking sector will be higher after the crisis than before it.

Second, there was a superior alternative.  The special resolution regime (SRR) for commercial banks administered by the FDIC should have been made available to Merrill Lynch.  Merrill Lynch was an investment bank for which no SRR existed.  That itself was a scandal and a major failure of regulation, expecially since the authorities must have become aware of this when Bear Stearns went belly-up in March 2008.  Some day the history will have to be written of the collective dereliction of duty by regulators, government officials and legislators, that resulted in the absence of quick and efficient mechanisms for putting banks and other highly leveraged, systemically important institutions through an insolvency process lasting no more than a weekend.  Later in 2008, the two remaining large independent investment banks were transmuted into bank holding companies.  That could and should have been done for Merrill.

Merrill could, through the SRR, have been put through a Chapter 11-lite, in which some or all of its unsecured creditors could have been forcibly converted into common stock holders (in inverse order of seniority).  Its board and top management could at the same time have been fired without golden parachute.  Merrill Lynch as a legal entity would have ceased to exist.  New Merrill, the same organisation except for the old leadership, would have re-emerged with a sound balance sheet containing lots of equity and little, possibly no, unsecured debt.

The mandatory debt-to-equity conversion should have gone up the seniority scale until Merrill was properly capitalised.  The whole exercise (conversion to commercial bank status and debt-to equity conversion) should have taken no more than a weekend.

Instead, the regulators and the Treasury decided to cut an opaque deal of questionable legality to save the skins of the unsecured creditors of Merrill.  By doing this they created a merged entity (Bank of America + Merrill) that would fail without government support and, if prevented from failing by a tax payer bail-out, would become a zombie bank: alive but doing very little new lending.