KEY POINTS:
It was possible to hope, watching Barack Obama's inaugural speech yesterday morning, that the United States might now have a President worthy of it.
You could allow yourself to believe that he might prove to be one of the great ones.
Because that is what they - and we - need right now.
His task could hardly be more daunting.
On the economic front it is the deepest slump since at least the early 1980s, if not the 1930s.
Homes have been lost, he said, jobs shed and businesses shuttered. Those things can be counted and quantified.
"Less measurable but no less profound is a sapping of confidence across our land - a nagging fear that America's decline is inevitable and that the next generation must lower its sights."
Dealing to that is essential.
In this speech Obama struck the right balance between a sober acknowledgment of the magnitude of the challenges and a summoning of the intangible things needed to meet those challenges - confidence, hope and a sense of all being in this together.
The US economy is not just a machine: Set Fed funds rate to zero, insert a trillion dollars of fiscal stimulus, crank the handle and out will come recovery.
It is also, and never more than in times as perilous as these, about sentiment. The President has to be cheerleader-in-chief, without sounding fatuous or out of touch.
Obama achieved that yesterday.
The challenges were serious and many, he said. They would not be met easily or quickly, but they would be met.
He acknowledged that the economic crisis is not merely failure of regulatory oversight, and still less of markets themselves.
But rather a moral failure: "A consequence of greed and irresponsibility on the part of some, but also of our collective failure to make hard choices."
A nation cannot prosper long when it favours only the prosperous, he said.
Hence his appeal yesterday to the deepest tap-root of American values and strengths.
It seemed to resonate during the election campaign: that inclusive "we" between the affirmative "yes" and the confident "can".
The inauguration is not the occasion for a policy speech, of course. It is altogether a more elevated affair.
But there were some passing references to the emerging shaping of the stimulus package the new Administration is working on.
Infrastructure spending will clearly be a big part of it - building roads and bridges, a smart power grid and a more extensive and expensive broadband network.
The twin challenges of energy security and global warming are clearly also being taken seriously: "We will harness the sun and the winds and soil to fuel our cars and run our factories."
There was also a commitment, or perhaps plea, to move beyond ideology and "worn-out dogma" towards a new pragmatism.
The question should not be whether government is too big or too small, but whether it worked. When the answer was no, programmes would end.
The nod towards fiscal responsibility and accountability is clearly warranted.
Obama inherits the prospect of US$1.2 trillion ($2.26 trillion) budget deficit this year, even before the cost of his own stimulus package, US$800 billion or so, is added.
The US could be looking at a fiscal deficit of 10 per cent of GDP, the equivalent of an $18 billion deficit here.
Even so, commentators like the most recent Nobel laureate in economics, Paul Krugman, doubt if the proposed package, which comes on top of the US$700 billion package passed late last year, will be enough.
An assessment by Christina Romer and Jared Bernstein, two of the new Administration's most senior economic advisers, of the potential impact of the stimulus package is that by the end of next year it would increase employment by 3.7 million jobs and increase GDP by 3.7 per cent.
But the US economy shed 2.5 million jobs last year and without stimulus, could lose three to four million more, Romer and Bernstein reckon.
So even with the plan, unemployment would hit 8 per cent this year and still be 7 per cent by the end of next year.
Without a stimulus plan, it would climb to 9 per cent and stay there longer. Either way, we are looking at an extended period of job losses and job insecurity in the world's largest economy.
And that is on top of the negative wealth effects of falls in the value of housing and equity markets. Meanwhile, US monetary policy is hitting the limits of what it can do.
Goldman Sachs' chief US economist Jan Hatzius has applied the Taylor rule, which is generally a good guide to what central banks should and will do to interest rates, to forecasts of US output and inflation over the next few years.
The conclusion is that the Fed funds rate - the equivalent of our official cash rate - needs to go about 6 percentage points lower.
It can't, of course. It is already zero.
Fed chairman Ben Bernanke insists that the Federal Reserve is not "out of ammunition" and that various unconventional measures at its disposal will allow it to put further downward pressure on interest rates. Let's hope so.
Obama's speech was a reminder that to get out of the current hole, America will need to set aside its divisions and harness all of its formidable resources.
The days of protecting narrow interests and putting off unpleasant decisions had past, he said.
That is a message that deserves to resonate around the world.
Two risks in particular grow larger the longer the global recession lasts.
One is beggar-thy-neighbour protectionism.
The European Union's reinstatement of export subsidies on dairy products is only one of the recent examples of backsliding on the free trade front, as Mike Moore reminds us - the awful example of the 1930s notwithstanding.
Another danger is that the political will to tackle climate change on a multilateral, burden-sharing basis will be lacking and that this year's Copenhagen meeting to draw up a successor treaty to the Kyoto protocol will fail.
That would be a shame, because although the recession changes a lot of things, it does not change the laws of nature or arithmetic.
Obama, at least, understands that the necessary technological shifts ahead of us are a job-rich opportunity and not just a cost to be dreaded and deferred.
