KEY POINTS:
So, the eye of the storm then.
World markets are on the rebound and, though there are few who would suggest that the financial sector is out of the woods yet, the enormous scale of the intervention by United States officials has appeased investors for now.
The triple shot rate cut, a US$150 billion rescue package of tax rebates and the complicated but crucial bail-out plan for the bond insurance market are a stunning reminder of just what a centrally controlled economy the US remains.
History would suggest that after the initial shock we'll now see a period of sustained volatility on the markets, with rallies and falls and little real growth for some time.
This period can be a lucrative time for share traders and hopefully won't be too distressing for those who are investing for the long haul.
The New Zealand market has born up pretty well in global terms.
That resilience will face its first real test when the corporate reporting season kicks off in mid-February.
The economy is slowing now and that will flow through to profits for some companies - probably the retailers in the first instance.
As well as the results - which are historical - the market will be braced for new profit forecasts from most of the major companies. These are likely to be somewhat less than bullish.
Hallenstein Glasson's confirmed yesterday that their sales for the second half of the year are 2 per cent off the year before and that its profit is likely to be down on last year.
Not exactly a meltdown but another indication that domestic spending is starting to ease off.
The combination of reduced earnings, gloomy forecasts and overseas volatility could well mean a few more dark days ahead for the NZX. As for what happens next on the world stage, it really is guess work.
The unanswerable questions are: How serious will the US downturn now be? And: How serious is a US recession for the rest of the world in 2008, given the strength of Asian economies?
As usual we have a full spectrum of predictions to digest.
A more interesting question is perhaps: What do we want to happen next?
There is little argument among economists about the need for some deflating of the New Zealand economy.
Exporters need a lower dollar, homeowners and business people want lower interest rates and - though it's hardly a fashionable cause - employers could use some loosening of the employment market.
So, it is tempting to look for some hope in the US downturn.
Unfortunately a serious US recession will flow through to us via our major trading partners (of which the US is one), and can only mean this country earns less money.
Less cash in the pockets of Asian consumers means they'll eat less pizza, less icecream and dairy prices at current levels will be quickly unsustainable. The same goes for wine and lamb and most of New Zealand's exports.
It will be the productive end of our economy that suffers.
So let's hope Mr Bernanke and Mr Bush really have pulled a rabbit out of the hat this week.
It might be boring and Alan Bollard has been banging on about it for years, but the only good way for the economy to slow down is for New Zealanders to spend less and save more.
* Liam Dann is business editor of the Herald.
