I will be participating tomorrow in a Radio New Zealand debate "New Zealand in 2020" so have been turning my mind to the elements of a comprehensive vision for New Zealand . Although there is plenty to be optimistic about if the right policies are in place it is harder to be visionary at a time when the world’s financial system is showing symptoms that are frighteningly similar to the US share market collapse of 1929. The 1929 collapse led to the Great Depression which in turn led to worldwide economic collapse and thus, indirectly, to the rise of fascism in Europe. The snowballing of human misery grew into an avalanche of despair leaving few in the world untouched.

I am reminded of President Hubert Hoover’s presidency from 1929 to 1933. His instinctive reaction to any adversity was to “tighten the belt” and to try and work harder. These are seldom bad instincts in an individual but can leave one looking in the wrong direction when running an economy. The collapse on Wall Street in 1929 did not automatically have to cause a depression . But it did cause a lack of confidence in financial institutions which extended to the banks themselves and they would not lend to each other for fear that they would never see their money again. So when one bank failed - the grandly named “Bank of America” - there was a run on banks and institution after institution collapsed. The soundly run banks could have survived with emergency loans but none were forthcoming from the Federal Reserve which failed miserably in its duties. The amount of money in circulation dropped dramatically forcing an agonising readjustment of prices. Very few people understood what was happening at the time including President Hoover . He became a virtual prisoner in the White House, unable to bear to look at the misery outside and with absolutely no idea what to do about it.

President Bush and the current president of the US Federal Reserve, Ben Bernanke, do not wish history to record them in a similar light so have brought legislation to Congress proposing an enormous bail-out - this has just been passed into law .