Fear was out in force on global markets yesterday, with greed relegated to a walk-on role. Uncertainty breeds fear, and fear in these markets is infectious. There are a number of unanswered questions dogging the markets. The jury is out on President Bush’s rescue plan and its ability to revive a flagging US economy. The fallout from the US bond insurers’ slow implosion is yet to play out in the Wall Street banks’ figures. The revelation that Chinese banks could be facing billions of dollars in sub-prime losses was enough to provoke horror in Hong Kong. The sub-prime pain may have spread to China, but it is unclear how much it will hurt and how far it could spread.

Yesterday, in London, the uncertainty was exacerbated by the silence from Wall Street. It was Martin Luther King Day in America and markets were closed. But in a sell-off triggered in part by fears over a recession in the United States, the absence of any indication of US sentiment was unsettling.

Into this knowledge vacuum step the politicians. The ability of any Government to stave off a recession is questionable. The Bush Administration has been able to pledge 1 per cent of GDP to making the attempt, even if it looks a little hopeless. The parlous state of the UK’s public finances leaves Gordon Brown with no room to make even a token gesture. Data yesterday showed that Britain’s monthly deficit in December was the worst on record, as it plunged still further into the red. The latest set of figures show again how little space for fiscal manoeuvring Mr Brown has. We can expect to see a raft of measures aimed at emulating the US rescue. With no money behind the words, these will be placebo policies only.

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