To Wall Street chiefs, the success of Britain’s financial centre was just as galling. America is supposed to be the leader of the free world, and yet somehow it was London that emerged as the true global capital, a magnet for the smartest financiers on the planet. The European Commission has been out to destroy the City since its inception, horrified at how the eurozone’s launch only accelerated the exodus from Frankfurt. Yet for almost two decades, London has seemed indomitable.

No longer. The City today stands more vulnerable than at any point in its modern history with the Americans, the Japanese and even the Swiss launching their own investigations into skulduggery over the Libor rate-fixing scandal. Their collective ambition is becoming increasingly clear. It doesn’t matter if the Libor rigging was only being cooked up by a handful of traders in one niche of the City.

Here is a chance, perhaps the best they will ever get, to declare the entire place corrupt and claw some business back.

Such discussions are preliminary, and it is unclear if regulators will enter these talks, aimed at resolving allegations that banks attempted to manipulate the London interbank offered rate, or Libor, a benchmark that underpins hundreds of trillions of dollars in contracts. Still, there are powerful incentives for the banks to enter joint negotiations.

Barclays Plc was the first to settle with US and British regulators, paying a $453 million penalty and admitting to its role, in a deal announced June 27. Its chief executive, Bob Diamond, abruptly quit the next week, bowing to public pressure and erosion of the bank's reputation.

The sources told Reuters that none of the banks involved now want to be second in line for fear that they will get similarly hostile treatment from politicians and the public. Bank discussions about a group settlement initially took place before the Barclays agreement, and picked back up in the aftermath. It is unclear which banks are involved in the potential settlement talks. More than a dozen banks are being investigated in the scandal, including Citigroup, HSBC, Deutsche Bank and JPMorgan Chase. They all declined to comment.

Anecdotal evidence and economic assumptions suggest that a record number of farmers are likely preparing to file insurance claims this year, opting to plow under their withered crops - some without bothering to administer the costly pesticides and weed killers that might help salvage a dwindling harvest.

Call it "moral hazard" in the heartland: with the growing use of federally backed crop insurance, a shift toward larger policies and newer schemes that protect revenue, some experts say farmers may now be better off claiming a total loss than eking out a shrunken harvest - a move that could exacerbate a 50 percent surge in corn prices by further reducing supply.

"Why spend money trying to save a crop when every bushel of crop you save is then going to reduce the indemnity that you would otherwise receive?" said Vince Smith, an economist at Montana State University who has been critical of the program. Under a master agreement with the industry, the US Department of Agriculture pays an average 60 cents of each $1 of the premium. It subsidized up to $1.3 billion a year in overhead costs, and it shares the burden in case of catastrophe.

“And I’m saying an extra prayer now. If I had a rain prayer or a rain dance I could do, I would do it.” In a statement, Tom Flynn, the executive director of the Council for Secular Humanism, said Vilsack's mention of prayer “sends the wrong message to distraught farmers.” “Praying for rain? That’s not just government entangling itself with religion, that’s government publicly practicing it, and wallowing in superstition,” he said.

“When we broke the link between money and gold, this removed all constraints on credit creation. This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there’s a very real danger that we will collapse into a new Great Depression,” he argued.

“If this credit bubble pops, the depression could be so severe that I don’t think our civilization could survive it.” The explosion in cheap credit has been widely blamed for the global financial crisis, but the debate about how to fix the problem continues.

In the past few years, central banks including the US Federal Reserve, the European Central Bank and the Bank of England have pumped liquidity into their financial systems through a number of ways, including quantitative easing and the ECB’s long-term refinancing operation . “We could keep deferring the depression, but that could just encourage the bad guys. If you do this, you possibly do more harm than good,” Roger Nightingale, economist and strategist at RND Associates, told CNBC Monday.

“You can defer, but not prevent.”

In 2011, governments, industry and ordinary computer users spent roughly £65 billion shoring up their computer networks, a figure that is predicted to double within five years. In Britain, cyber security bucks the recession and receives more money from the Treasury every year. Yet even this is not enough, according to the Commons select committee on intelligence and security, which published its annual report this week.

Not only do we need to spend more, the committee also implies for the first time that Britain should ramp up its “active” defence strategy to keep pace with the proliferation of cyber attacks that rain down on our institutions, companies and citizens every day.

We are thus stumbling into a new era of warfare with only the vaguest notion of its legal, political and technical implications. The Government may conclude that we have no choice but to join in – but as our dependency on network computer systems deepens by the day, the consequences of things going wrong become ever more serious.