The global economy and the Hollow Men

If policy makers wanted to sound the alarm this week about the risks facing the global economy they've succeeded. Investors are alarmed.

Markets have been tumbling around the world, in reaction to a darkening global economic landscape - and some equally dark language that politicians have been using to describe it.

No wonder that Christine Lagarde was trying to introduce some light, to go with the gloom, in her remarks at the BBC World Debate, in the main atrium of the International Monetary Fund on Thursday.

Again and again, she said it was important to focus on the bright side: the parts of the world that were growing, and the steps that European politicians, for example, have already taken to get the crisis under control.

There is a path out of this which politicians can take, she said, it's just narrower, and steeper than it was three years ago.

The US Treasury Secretary, Tim Geithner, struck a similar tone, in a televised interview for a US political magazine on Thursday morning.

He rejected the idea that America was facing a lost decade.

And when asked whether Greece would default, he insisted that European leaders would not let Greece be a "Lehmans-style event" for the global economy.

But of course, you can read that two ways.

You can read it as saying that Greece will not be allowed to default. Or, you can read it as saying that Greece will not - must not - be allowed to default in an uncontrolled way, that brings down banks and infects the broader European economy.

No-one's saying never, these days, when it comes to a Greek default.

Geithner's message

Mr Geithner did say that he was confident that the Europeans would be beefing up their emergency bailout facility, the European Financial Stability Facility, to give it more firepower to respond to crises and, for example, provide additional capital to banks.

That is something that the French and German leaders explicitly said they would not do, only a few weeks ago.

So, at the BBC World debate, I asked the European Commissioner, Olli Rehn, whether that was on the cards - and if so when it would happen.

He said it was a good idea in principle but - surprise, surprise - governments needed to take it one step at a time.

I'm guessing no-one should hold their breathe.

In their letter to President Sarkozy, laying down the priorities for the Cannes G20 Summit, David Cameron and five other heads of state put their finger on the problem: they said that confidence of citizens, businesses and markets had been damaged by a "lack of visible political will".

But it's not only a question of will.

Impossible action?

What makes some here really gloomy is not just that politicians seem to lack political will - or a good understanding of the scale of the problem. Many of them have that already.

The real worry is that even when politicians in Europe and America decide they will take the difficult steps that the IMF and the markets are asking them to take, the current state of their political institutions simply won't make it possible for them to do it.

For all the consciousness-raising of the past few days, there still seems to be a large gap between what economists and markets say is needed - and politicians are able to provide.

There's a phrase from T S Eliot's "The Hollow Men" that keeps going through my head:

"Between the idea and the reality

Between the motion and the act

Falls the shadow."

Perhaps the G20 ministers meeting here in Washington will manage to lift it, but right now investors are seeing mainly shadow.