A year ago, denial was still very much in the air at the World Economic Forum. The Davos consensus embraced a “small problems scenario.” Most believed that any recession would be confined to the US - and that it would be short and mild. A global recession was simply inconceivable. In particular, a decoupled developing world - especially China-centric Asia - was thought to be largely insulated from any problems in the developed world and perfectly capable, in the view of many, of taking over as a new engine of global growth. And in light of a Fed-led policy stimulus, a US cyclical recovery was presumed to be just around the corner - and a pretty solid one at that. The financial system was not seen as an impediment to any of the above. In short, a year ago, the Davos consensus believed that every dark cloud had a silver lining.