The question is whether we have reasonable grounds to expect that the combination of private and public efforts to address the financial problems, a subsidence of the sheer panic in financial markets and the use of macroeconomic policy to provide stimulus to weak economies will establish sound foundations for a renewed period of expansion beginning some time in 2009.
The inauguration of a new US Administration is a key opportunity. The economic downturn has been deepening during the transition period. But if the new team can announce credible plans to accommodate the required adjustments in the US economy, confidence in medium term prospects can be re built. This would assist both the US economic recovery and conditions elsewhere.