When Key first became Prime Minister he told me he was optimistic that the global financial crisis would not be too lengthy as it wouldn't be long before "Gordon Gekko returned".
Gekko was a character in the 1987 movie Wall Street. He was also an exemplar of the "greed is good" thinking that held sway in the mid-1980s but was brought down when his greed got out of hand.
To Key the global financial crisis would ultimately right itself when Wall St recovered and businesses (and traders) started acting in their own self-interest again.
But weaning the world off a giant Ponzi debt scheme is proving more of a problem than Key, who was previously global head of foreign exchange for Merrill Lynch, had conceived when he began his prime ministership. Key may have got this wrong. But so have most of the financial and political world's elite.
Many European countries are doing it tough as they try to rebuild their finances. But the new "Age of Austerity" has limits, as Greek economics professor Yanis Varoufakis compellingly outlined this week. Varoufakis is among those promoting the concept of "Ponzi Austerity" . He believes austerity in individual economies can work well either "against the background of a healthy global economy or of internal Ponzi Growth".
Unless these conditions are present, austerity simply results in more unsustainable debt being created. The end result is collapse.
This underpins why many economists believe it is very difficult for countries to pull themselves out of the hole without sufficient demand in the global economy.
Key is not defeatist about New Zealand's long-term prospects. His recent European trip has convinced him that New Zealand is in a relatively good space compared with indebted European countries. New Zealand is also lucky as it produces products which regional growth economies such as China want.
As the international news became gloomier, Key said: "All we can do is follow the programme we have got, which is work hard to get back to surplus, work hard to lift the competitiveness of the economy and let's see what the global economy dishes up to New Zealand."
The problem is that depressive group-think in our top official circles is growing. This was obvious when Treasury Secretary Gabriel Makhlouf suggested there would be a "depression" if there was a full-blown collapse in Greece followed by Italy and Spain. "The impact on that will be a depression, a slowdown in world trade which will impact China and Australia and New Zealand."
Makhlouf later backed down, saying he meant depression with a small d, not a capital D. But his frankness also earned him a smackdown from Reserve Bank Governor Alan Bollard, who said: "There is prolonged recession and disappointing growth in some countries absolutely, but not depression. I think they should go back to their history books and look at what a depression is actually like."
Right now, Key and his ministers are placing considerable reliance on good policy settings. But they are not helped by official doomsaying.
However there are steps they can take to form a more optimistic - yet still realistic - view from the top table. If the world is indeed on the verge of another global slump, surely it is time for Key, English, Makhlouf and Bollard to form a top level think-tank to come up with ways to ensure New Zealand can surf any resultant volatility, come up with temporary measures to keep the Government's finances in check to ameliorate the $2 billion Budget hole that Bollard predicts lies ahead of English at the time he plans to post a surplus, promote New Zealand on the world stage to investors and customers and lift national spirits.
The Shipley Government had to contend with similar scenarios during the Asia crisis. Why not pull the key players together again now?
* Last week's column said Listener writer Ruth Laugesen was invited by the Treasury to interview its Secretary, Gabriel Makhlouf. The Listener points out that Laugesen requested the interview.
