WE NOW all live in the era of the blog. In the US, influential bloggers such as Arianna Huffington have made the online Huffington Post a must-read for those in American political circles, while the Drudge Report has consistently broken great exclusives, including the news that Prince Harry was serving in Afghanistan.

Blogging has become the new citizen journalism putting large corporations on the spot. And while YouTube and Bebo can make you an overnight celebrity, being an authoritative blogger brings intellectual kudos.

This is the 21st-century digital world we live in. But it does pose some serious issues for the way business is conducted. What happens if a powerful media organisation, such as the taxpayer-funded BBC, is being used for back-door dissemination of information whose unsourced presence in the public domain is useful to government?

And what happens when the state owns large stakes in the major banks and has privileged insider information from the boardrooms of those businesses that it doesn't like - or approve of?

How does it properly and appropriately pass on sensitive information? Because the UK government's recent behaviour has been shocking - and will result in a long-term breakdown in trust between government and business. Nothing less.

Some plaudits are due for the decisive way that Gordon Brown and Alistair Darling have handled the financial crisis, seeking the stability of the financial sector.

With the Conservative opposition neutered by its lack of cohesion and George Osborne's own embarrassments, the PM is enjoying a golden era of unfettered power. But the taxpayers' £37 billion stake in our part-nationalised banks means there has to be discipline and transparency about the dissemination of sensitive information.

The Labour government's media manipulation since the Northern Rock debacle has been grossly irresponsible. The latest example occurred last week when Robert Peston was apparently given the story for use on his blog that the Bank of China was the mystery party in preliminary discussions about a potential bid for HBOS.

Was this really another scoop for a well-connected BBC business editor, albeit the son of a Labour peer? Or was it a clunking attempt to kill off a sensitive discussion by exposing it to the public gaze?

While there has been a degree of paranoia about this journalist, I don't think for a minute the Bank of China backed off because of Peston's blog.

It would already have been given the brush-off deep inside the Treasury before Peston was able to make his announcement.

These are surreal days, when 18 Scottish Labour MPs and MSPs can find time to support a UK football team in the London 2012 Olympics, but utter not a dicky bird about the probable job losses caused by Lloyds TSB's proposed takeover of HBOS.

The Bank of China blog is a blip, but a symbolic one. We now have a Treasury mandarin, John Kingman, in charge of a UK government company - UK Financial Investments Ltd - created to manage the economic interests in banks with assets totalling about £3000bn in the high street banks. Kingman has taken a central role in the talks to agree the banking bail-out.

He is a very powerful individual running, by default, one of Britain's largest companies that will not be part of the civil service.

Still under 40, he is a high-flier who worked with Gordon Brown as a press secretary and rejoined the civil service in 1999.

Kingman has said he will oversee the specific commitment made by the banks as part of their recapitalisation. This is over mortgages and lending to small and medium-sized businesses. UKFI's job is to maximise value for the taxpayer - which is fair enough.

Kingman built his reputation during the Northern Rock affair and - surprise, surprise - he is a former colleague of Robert Peston. In his best-selling new book, Business Stripped Bare, Richard Branson writes about how Virgin's bid for Nothern Rock was stymied. "The Treasury didn't help matters when it started negotiating in the press, too. John Kingman, the civil service power broker in Treasury charged with running the show, actually told our team that in any decision made, the government would have to take account of the view of Robert Peston."

Last week's Bank of China leak will soon be forgotten. But if this tacit support for leaked blogging continues unchecked it will do harm to UK business. What happens, for example, if Eric Daniels at Lloyds TSB makes a commercial decision not to lend to more businesses because of the bank's lower appetite for risk, but Kingman's company disagrees and wants more bank intervention?

If you're a bank shareholder will you expect to hear about such significant differences in an official statement on the regulatory news service of the Stock Exchange?

I doubt it. I suggest it will be another banking "exclusive" on a BBC blog with the intro starting: "I can exclusively reveal from a source deeply imbedded in financial circles that "