( dpa ) - If business leaders and financial analysts were putting on a brave face when they arrived in Davos, Switzerland amid market turmoil, by the end of the week the mood was distinctly gloomier.
Still no one could agree how deep the crisis would go or how far it would spread.
As the US Federal Reserve took action Tuesday, cutting a key lending rate by three quarters of a percentage point, and global markets eventually rallied, US Treasury Secretary for International Affairs David McCormick said the US was still "the 800-pound gorilla" on the scene. US Secretary of State Condoleezza Rice called the US economy "resilient" and its structure "sound."
The sudden slump in world markets was still sending out shock waves as 2,500 politicians, business leaders and heads of international organizations gathered for the annual World Economic Forum on Wednesday.
But business seemed remarkably upbeat, insisting this was a short-term slowdown. Chevron Corporation Chairman and CEO David O'Reilly said: "The US economy will correct itself and perhaps even more quickly than people realize."
Former US Federal Reserve chairman Alan Greenspan was on Thursday quoted as saying the chances of recession were around 50 per cent but "we're not there yet."
At Davos the feeling was that the US had been careless and had to pay the price.
"Slowdowns can be useful to avoid build up of excesses which could lead to a worse crisis. A period of correction while having growth can be useful," Barclay's Capital United Kingdom President Jerry del Missier said.
Indian Finance Minister Palaniappan Chidambaram, meanwhile, said he expected the US to bounce back, though there could be a slowdown during two to three quarters while maintaining low growth of 1 to 2 per cent.
The emerging nations had been talked up through the week as a potential buffer to a global recession as a result of increased "decoupling," from the US due to the growth of regional and domestic markets.
Chidambaram said India was untouched so far but admitted he could not be sure of the effects of a full-blown US recession.
The US Federal Reserve was criticized simultaneously for moving too slowly and too quickly.
Merryl Lynch US CEO John Thain said while the Fed was acting aggressively, it might not be enough to get banks to lend again because of solvency issues.
A further lifeline thrown Thursday in the form of a package of tax rebates worth 150 billion dollars to boost consumer confidence, only seemed to add to fears that the crisis in the world's largest economy was indeed serious and might spread from the housing to credit markets.
Malcolm Knight, the CEO of the Bank for International Settlements in Basel, said the extent of global exposure to the subprime risk was not yet known but estimated at between 250 and 600 billion dollars.
The longer the crisis continued the more likely it was to leak into the real economy, putting pressure on payments not only for home loans but credit cards and cars.
"That is going to create an even stronger negative feedback," Knight said.
By Saturday International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn was saying: "There will be a serious slowdown and it needs a serious response."
The IMF was poised to release its latest outlook and slowdown clearly appeared, he said. He noted emerging countries were doing "rather well" at present but this could change.
He also believed there was a greater role for the IMF as global financial policeman.
Growing calls for tougher multilateral regulation and surveillance were taken up by European Central Bank (ECB) President Jean-Claude Trichet once the rogue trader scandal broke at French Bank Societe Generale on Thursday.
It could be difficult for the US to act in isolation. Action may be needed by India and China to correct inequalities in the world's trading accounts by boosting domestic demand.
Differences in opinion run as deep as the crisis which is still unfolding, but it looks increasingly as if the emerging countries may be required to calm David McCormick's 800-pound gorilla.