A few quick thoughts from a British friend: 1) Everyone knew something like this would happen; 2) It was almost certainly planned to coincide with the G-8 summit. The uncertain timing of a British election makes it hard to undertake long-term planning for an attack around one–so G-8 was natural target instead; 3) London won’t buckle. It withstood the Blitz and the IRA bombings; 4) Although the toll is terrible, the attacks weren’t spectacular or massive enough to rock Britain to its core the way you assume the terrorists wanted; 5) There should be retaliation. Find a terror camp somewhere and hit it. Terrorists should, for these purposes, be treated as one nation, and all should be held responsible for any one attack.