The gloom in London is palpable. While it may be a much richer society than Jamaica, that means it has so much further to fall. And, while Britain partied hard in the booming '90s, the fallout from what is turning out to be a lost decade is proving hard indeed.

Property prices are plunging. The stock market has collapsed. Banks are going to the wall. The total stock of bad debt in the United Kingdom is, proportionately, worse than America's.

Just a few months ago, British Prime Minister Gordon Brown looked like the saviour of the world economy when some aggressive action on bank failures seemed to stem the panic on global markets. Now that the panic has resumed, and Britain - mired yet deeper in debt - sinks further into an economic funk, all the shine has left Brown.

Assault on financial centres

No wonder he was so keen to fly to Washington to be photographed with the new rock-star president. He went seeking the president's support for his plan for increased global regulation of financial industries.

An assault on offshore financial centres may not be welcomed in Jamaica. Still, global coordination will be essential to the recovery of the world economy. The omens at the moment are pretty desperate. Global trade, on whose rising tide global prosperity swam through the last two decades, has plummeted. Governments everywhere are turning inwards. Should the drawbridges of protectionism rise, the likely outcome would be that a global recession of a year or two might become a depression of a decade or more.

Scary stuff

It's pretty scary stuff. The world economy is crying out for strong leadership to withstand the global tsunami. The new US administration will be key, and the upcoming G20 Summit will probably be a pivotal event.

So far, enthusiasm for Obama has not carried over to his economic team. Much of it is not yet in place, owing to snags in the confirmation process. The skeleton crew driving economic policy, which we were told comprised some of America's best economic minds, in fact depends upon some of the individuals who helped create the mess we're in. The dream team is keeping us up nights.

Besides, the world is a changing place, and the US cannot do it alone any more. China will have to play a central role in global economic recovery. In particular, with its vast store of foreign reserves, and its trade surplus, China can do a lot to pull the world economy from its slump. But to do so, it would have to move beyond its export-oriented growth model, turning more of its economy over to consumption. Moreover, it would have to do so in the context of an increasingly liberalised trading regime - in particular, by allowing its currency to strengthen.

It is not yet clear that all this will fall into place. China looks ready to make the transition from being a high-saving society. Indeed, in the context of slowing growth, social stability may well depend on Chinese citizens gaining greater access to consumer goods. But prodding them to buy a larger share of foreign goods? That may well turn out to be one of the great fights at next month's summit meeting.

Obama's endorsement

For now, Brown returned to London with Obama's endorsement for a global stimulus package. Back home, what this will translate into, is Obama's backing support for Brown's plan to borrow yet more money for the British economy. The British government is piling debt upon debt, putting the country's longer-term prospects in jeopardy.

But at least, being able to say 'Barack agrees' carries some clout in these early days.

John Rapley is president of the Caribbean Research Institute (CaPRI), an independent research think tank affiliated to the University of the West Indies, Mona. Feedback may be sent to columns@gleanerjm.com.