The gloom and uncertainty pervading the world's financial markets was fully reflected in the sombre, nervous mood during the opening sessions of the World Economic Forum in Davos. For the first time since its post-9/11 meeting in 2002, the bears are in the ascendant.
The mood inside the Congress Centre is as chilly as, and rather less sunny than, it is on the ski slopes surrounding this Alpine resort. Even the upbeat US Secretary of State, Condoleezza Rice, telling her audience that "the US economy is resilient, its structure is sound, and its long-term fundamentals are healthy", was not enough to lighten the mood.
Some of the world's leading economists are predicting a recession in the US and – at the least – an extremely sharp global downturn. Many are starting to question the recent conventional wisdom that the "decoupling" of the emerging economies from the US will be sufficient to protect them and the wider world against the "contagion" of a full-blown American recession.
Joseph Stiglitz, a past Nobel economics prize winner and professor of economics at Columbia University, said: "What we have now are the foreseeable consequences of bad economic management". He traced the current crisis back to the White House's tax cuts in 2001, with the predictable problem of Americans being asked to take out mortgages they could not afford being compounded by the Iraq war, soaring oil prices and over-consumption to the extent that the US savings rate fell to zero for the first time since the Great Depression. Mr Stiglitz said "the American economy was sustained on borrowed money and borrowed time", and called for a programme of Federal spending to reduce the risk of a slump.
Stephen Roach, chairman of Morgan Stanley Asia, dismissed the Fed move as a "dangerous, reckless and irresponsible way to run the world's largest economy", and pointed out that the world was still dependent on American consumer spending, which at $9.5 trillion a year far outstrips India ($650bn) and China ($1trillion). Should the US stumble, the world faced "the mother of all recessions".
However, some participants, such as the US economist Fred Bergsten, pointed out that the emerging markets, on a purchasing power parity basis, were now responsible for half of the world's GDP. Even if they slowed by a percentage point or two and Western growth slowed to 1-2 per cent, world economic growth would still be about 3 per cent.
Even so, Davos remained stubbornly focused on the US and signs that the credit crisis is spreading to equity markets and the "real" economy. Few around the Davos Congress Centre would disagree violently with the conclusion from Nouriel Roubini, a New York university professor and prominent "bear": "It's not about a soft landing or a hard landing, but rather how hard a landing it will be."