So, farewell then, Alistair - Gordon's darling no more. The Chancellor's candour over how the country is "p***ed off" at Labour for the worst economic crisis in 60 years may only have hastened his departure at the forthcoming cabinet reshuffle. Darling's pessimism about Labour's chances in the Glenrothes by-election will not have helped. He was supposed to be the ultimate ministerial safe pair of hands. His kamikaze raid on political reality is the latest twist to Labour's continuing Scottish crisis.

Still barely recovered from the shock of Wendy Alexander's resignation over her campaign funds, and with no clear leader emerging yet from a Scottish leadership contest of unmitigated tedium, the question is: where now for Labour? We know where Alex Salmond is going. Victory at the Glenrothes by-election seems assured, with the SNP's lead in its latest poll of polls running at 11% over Labour in Westminster voting intentions. If the by-election is held, as expected, in late October or early November, that will suit the SNP very nicely. There is plenty of bad news expected on the economy as Britain tips into a winter of recession, and Brown is expected to take a pasting this autumn from the resurgent Tories, and from many Labour MPs.

The implosion of Gordon Brown's leadership has been an astonishing political windfall for the SNP, who could never have dreamed that this once respected Scottish politician would fall under a bus - figuratively speaking - almost as soon as he took office. Labour's agonies over Brown's leadership show no sign of easing. Brown's post-Olympic relaunch stalled almost before it began. The much-heralded package of "help" to home buyers will do little to stop the house-price crash, since no-one in their right minds would buy a house right now, even with local authority help. A few pounds in assistance with fuel bills is unlikely to draw the sting from the outlandish price increases imposed by energy companies without a hint of censure from the PM. Whose side is he on? Why were windfall taxes acceptable in 1997 but not in 2008?

Brown has succeeded in alienating many in his cabinet who feel he has failed to lead and believe he has blamed them for his own failings. Perhaps this explains why some in the cabinet are so eager to see the PM take a front-line position in the Glenrothes campaign - a bit like the soldiers in the First World War who wanted their officers to go over the top first. Except that Labour's troops don't seem very eager to follow.

Meanwhile, Alex Salmond gets away with political murder in Scotland. Credit crunch? Blame London's failure to boost the economy with a package of Keynsian stimulants. Fuel prices? Blame London again for not introducing a windfall tax on the energy utilities. The SNP continue to exploit the virtue of their constitutional ambiguity: when it suits them, they are the government, abolishing prescription charges and freezing council tax; when nasty things happen, and airlines go bust, it's the government in London wot's to blame. Labour have to find some way of holding the Scottish government to account, and pinning a few misfortunes on the First Minister.

It won't be easy. The SNP plan to do as little as possible to divert attention from Labour's leadership problems this year. In Holyrood, they'll take a bit of a breather, with measures to curb cigarette sales and to prevent off-licences selling alcohol to under-21s.

The dialogue with the Tories will continue, especially now that David Mundell, the Shadow Scottish Secretary, has said that the Conservatives would negotiate over that £400m in council tax benefits that Labour say they will withhold. Intriguingly, all three candidates in Labour's leadership contest have said that Labour "should be prepared to talk openly about reform of the council tax", to use Iain Gray's words - though none of them want to do so quite yet. Will the UK government be similarly reluctant to continue council tax benefits if Scottish Labour decides to abolish council tax, too?

With the aching vacuum in Westminster, there should at least have been an opportunity for a new Scottish Labour leader to assert him or herself and drive a new, radical and distinctively Scottish agenda. Wendy Alexander tried, with the Calman Commission and the referendum on independence, but she fell at the first hurdle. It seems unlikely that her successor will be half as bold or intellectually imaginative.

The expectation is that the former Labour Finance Minister, Iain Gray, will prevail in the Labour leadership contest, which enters its final stage this week, but it's very hard to tell in a race that has taken place in almost complete obscurity. The joke going around is that there's no need for scientists to develop optical camouflage technology - the Scottish Labour leadership candidates have already invented an invisibility cloak.

It was almost as if the candidates didn't want to get noticed in case they said something they might regret. After the bombshell dropped in July by the former Finance Minister, Tom McCabe, who called for an autonomous Scottish leader with power to scrap the council tax and dump the London link, the Labour candidates had to use every verbal trick in the book to avoid saying anything about the constitution. The former Health Minister, Andy Kerr, said he wanted the Scottish leader's powers to be "beefed up" but carefully avoided saying how. The streetwise Cathy Jamieson, the only candidate the SNP really worry about, confined her campaign to the trades union constituency, calling for rail mutualisation and protection for shop workers.

After extensive research by Scottish journalism's most gifted minds, it has emerged that Iain Gray said nothing at all - except that he is as Scottish as anyone else and that Alex Salmond is "a playground bully". Well, Mr Gray can be assured the First Minister is waiting at the school gates and wishes to know if he is hard enough.

The perception, as always, is that Labour isn't really master of its own destiny. The leadership contest - the first in which Labour has elected its Scottish parliamentary chief by a democratic ballot (though MPs' votes are worth rather more than ordinary members) - has confirmed what many expected: that Labour simply cannot adopt radical policies for fear of antagonising Westminster. It has to be sotto voce politics - quiet enough for London not to hear.

It can't go on like this, and many in the party realise it. The unthinkable is being thought: a separate Scottish party, a unification of the leadership, turning the Scottish leader into the Scottish Secretary, with cabinet voting rights and a seat in the House of Lords. All are under discussion. Some way has to be found to make the Scottish leader a real leader, otherwise Scottish Labour could end up going into the same political oblivion that obliterated the Scottish Tories.