This is how I read what has happened...
1. George gossiped to journalists about what Mandy said about Gordon. An understandable thing to do bearing in mind his return to government. Perhaps he should have kept it zipped, but we have all done it. Normally, embarrassment is the only consequence of being found out. Ahem.
2. Mandy was outraged and promised revenge. Nat Rothschild was none too impressed, and goaded by Mandy, decided to take things further.
3. It was a mistake to do the live TV press conference before issuing a detailed rebuttal statement.
4. The media hasn't yet asked itself what crime has been committed. Answer none. No money has been donated so there has been no wrongdoing.
5. If someone asks you, as a politician, or as a party employee about donating you have two choices. You either point them in the direction of someone else or you explain how the system works and what the legalities are. That is not a crime. It is not even a thought crime. Yet.
6. So what we are talking about here is an allegation that a conversation about a donation took place. As Stephen Tall says, this is a bit of a he said-she said-he said situation. Rothschild says he has a witness to the conversation. Why hasn't he produced the witness then?
It's clear that the root of this is that Rothschild is furious that Osborne has broken the unwritten rule that says 'what happens on tour, stays on tour'. And he has exacted his revenge in a particularly spiteful way.
The media is in full herd instinct mode without actually stopping to think: hang on a minute. What's he actually done wrong? What law has he broken? What rule has he transgressed? Perhaps they might like to concentrate a little more on this sentence from Nick Robinson's blog this morning.
Mandelson's first instinct was to refuse to answer questions about what he said was his private life. He knew all too well that the way the media can keep a story running is to publish a list of "unanswered questions". This approach did not, however, kill the story. Nor did the backing of the EU Commission which declared him not guilty of a breach of the rules. So far, no evidence has been produced that he broke any rules but there's little doubt that had he behaved this way as a cabinet minister he would have been in breach of the ministerial code which advises against perceived conflicts of interest.
Isn't that far more serious than anything George Osborne has been accused of? But I didn't comment on Mandelson's situation any more than I had intended to comment on George's. But it has now blown up into such a ridiculously big story that those of us who happen to think a lot of George Osborne need to stand up and say so. His detailed chronology of events is well worth reading in full. It is unprecedented in its detail. Its message to Mandelson is: I've shown you mine, now you show me yours.
ConservativeHome has published a superb piece on why George Osborne is indispensable and it reminds us why the barricades need to be manned in his support.
The lessons here are...
1. Politicians are never 'off duty'.
2. Choose your holiday companions more carefully.
3. What happens on tour rarely stays on tour.
And above all...
4. Peter Mandelson is back and making sure we all know it. And isn't Times Political Editor Phil Webster a happy man! As is Robert Peston.
Peston hasn't liked Osborne's comments about his role in last week's events and this has given him a reason to hit back. Mandy's briefing fingerprints were all over this particularly poisonous blogpost from Peston this afternoon. Quite what this has to do with the BBC's Business Editor is another question. Perhaps Nick Robinson should talk to him about tanks and lawns.
It's been a pretty torrid week for the Shadow Chancellor. But every politician has to go through character building experiences like this. Osborne should take heart from the way his leader performs in these circumstances. Cameron displays courage under fire which we must all hope George Osborne can emulate. He is as vital to the Cameron project as Tord Grip was to Sven. He must also trust his instincts. I do not believe he wanted to do that wretched press conference this afternoon and should not have allowed himself to be talked into it. He's got an instinctive political brain. Now is the time for him to engage it.
Politics has changed in the last few weeks and for once, I don't think Conservative High Command realised it quickly enough. Trench warfare lies ahead. Sod bipartisanship. Brown hasn't got a bipartisan bone in his body. He regards the very notion of it as a sign of weakness. Brown wants a fight. Let's give him one.