By Simon Tay
Almost a year ago, Lehman Brothers collapsed in the United States, triggering a financial crisis. I was in New York at the time, and got a sense of the sudden, headlong panic.
Things are now calmer, they seem almost normal.
American banks at the epicentre of the crisis have reported profits. While still holding government money, they have controversially doled out bonuses to their executives. American consumers have been buying cars, exchanging their "clunkers" for greener, newer models.
Larger countries in Asia - China, India and Indonesia - continue to grow, albeit at slower rates. Some companies report profits. In recent summer months, stock markets surged worldwide. There are analysts, like some in JP Morgan, who believe that American consumer demand will rebound.
Is growth returning? Will the "green" shoots that some tout take root and blossom?
A global meltdown has been averted but there are reasons to remain sceptical.
In some cases, reported profits come only after writing off huge losses. Companies are restocking but only after running down their inventories. For the most part, the billion-dollar stimulus packages of governments worldwide - and not private consumption - are shoring up the economy.
In the US and China, state agencies, banks and other institutions have pushed out funding generously, acting almost spendthrift. What happens if big government spending stops?
There seems little confidence for growth unless the state is throwing money at the problem.
The world economy went into shock and seizure at the end of 2008. With emergency intervention, the pulse restarted. But the patient is still weak and on assisted breathing. At some point, the world economy must breathe without government assistance.
Government stimulus and budget deficits cannot continue indefinitely, even for those with large reserves. Government spending can be often politically motivated and wasteful. Another real danger for many countries is that opportunities for corruption will rise with big budget public sector projects.
Governance systems will need to be watchful, and work with responsible corporations in the private sector. If not, much of the public expenditure spent in response to the crisis can be illegally diverted to private pockets.
People are now searching for new drivers for growth to replace consumption in the West, especially the US. Without this, there may be a "new normal" with more modest rates of growth. The economy seems likely to bump up and down along the bottom.
One alternative to Western markets and government stimulus packages is for Asian economies to find ways to increase their own domestic markets and intra-Asian demand. But this easier to prescribe than practice.
There are those who believe that Asians emphasise saving as a virtue. More generous social safety nets and higher wages may help change habits. But these relate to competitiveness, since the Asian model of export-led growth often rely on lower cost structures. Mindsets in Asia need to change.
Take a look at freer trade, to which many Asians say they aspire. Many only focus on their exports being free to enter other markets. The reverse freedom - the right of others to enter their domestic markets - has proved stickier.
In the crisis, trade has been shrinking, de-globalising. Larger Asian economies are not opening their markets and, in pump-priming their domestic markets, some have been nationalist, if not outright protectionist. Access for smaller economies has not improved.
Part 2 of the crisis is just beginning. We have gone beyond the panic of September 2008. But the path ahead may prove every bit as tumultuous.
Simon Tay is chairman of the Singapore Institute of International Affairs and a Bernard Schwartz Fellow at the Asia Society.