Despite Gordon Brown’s attempts to give the impression that he is in sole control of saving the entire world from economic disaster, he is in fact just one of many politicians who need to be seen to be doing something to help restore public confidence.
Do not be fooled for a moment that every government is following his model. The reality is that it is President Elect Obama and his team to whom we need to pay closest attention.
There are a number of key factors. First there’s the US economy, which the pundits generally agree is now in recession.
The relevant question here is whether this will be merely a deep recession, or whether it will develop into a full-blown depression.
The answer will very much depend on whether the Obama team can come up with a way of halting the increasing foreclosure in the domestic housing market because, until the average US homeowner feels safe in their home, they are not going to go out on the sort of spending spree (including renewing that great American status symbol the automobile) that might help get us out of trouble.
This said, best estimates suggest that it will be well into 2010 before the US housing market might begin to show any signs of improvement. Next is the vexed question of interest rates and inflation. It is said by some that the last big bubble to be solved is the public debt of the US, UK, European and Japanese treasuries.
As Gordon Brown is finding out, the private sector, contrary to his expectations, is rather more likely to be set on paying down debt than on going on yet another spending spree on the back of the current low interest rates.
The US is no different to us in this regard.
Many now feel that instead of trying to cure the problem with increasingly easy money, the world needs to allow for the contraction of credit and bring us back to a proper lending basis.
While the US may instigate some major infrastructure spending in the short term to stimulate economic activity, we may see US interest rates start to rise in 2010, simply to protect the dollar.
Then there is energy. On the face of it, falling oil prices may appear to be a good thing.
Here at least, as politicians are keen to point out, are some crumbs of comfort for the hard-pressed consumer.
But again we need to consider the wider world.
Despite everything Mr Brown may tell us, we are in a global market and an oil price of $40 a barrel is not good news.
Many of the smaller oil producers cannot work on such low prices and the result could well be the destabilisation of these countries.
The last factor to look at is the reform of the global financial framework. We have to recognise that the current model did not work. The best we can hope for is that, despite calls to the contrary, countries are forced back into the sort of proper budgetary and monetary disciplines that have been out of fashion for so long.
We may also see more countries having to be bailed out by the International Monetary Fund, thanks to a generous US administration, to maintain global stability. Alternatively, there is also the danger of an immediate, knee-jerk reaction in the form of over-regulation, which would definitely not help in the long run.
Nicholas Watts is an independent financial adviser with Positive Solutions Financial Services. To contact him, use the website: www.realweathmanagers.co.uk