The only reason I am not going to apologise for my predictions in this column a year ago is that I didn't make any. Had I done so, they would have been hopelessly wrong. I would have said that the credit crunch, if not almost over, was not going to get very much worse. I would have said that the impact on the economy would be bad, but not that bad, certainly not as bad as the recession of the early 1980s. I would have been in good company, of course. Most people got it hopelessly wrong and many of those who got it right, got it right for the wrong reasons.

Part of the reason I got it wrong was that I did not believe the US authorities would let a financial institution such as, say, Lehman Brothers, go under. In arranging the earlier rescue of Bear Stearns, the US Federal Reserve had shown that it was more concerned about protecting the financial system in the short term than it was about the risk of “moral hazard” in the long term. Senior Fed officials privately played down the threat that protecting investors from the consequences of their rash behaviour would encourage more rash behaviour. They sided with Larry Summers, the former Treasury Secretary and now key adviser to Barack Obama, who warned again “the moral hazard fundamentalists”.

So it came as a surprise when the authorities allowed Lehman to fail. It is still unclear whether Hank Paulson, the Treasury Secretary, deliberately stood aside or whether, as he said in an interview this week, the authorities tried to save it but the deal slipped away. In any case, after Lehman, he definitely got it. It became clear that the authorities in the United States, and increasingly in other countries, were prepared to do whatever it took to avoid economic disaster. Worries about moral hazard, nationalisation and ballooning government borrowing went out of the window.

That is why there is a very good chance that we can avoid a prolonged economic depression, even though the actions being taken by governments now could be storing up problems for later.

Nonetheless, I think that it is too much to hope that we will start to see much of a recovery this year, even in the US. The scale and complexity of the problem - involving huge falls in house prices, stock markets and credit - is unprecedented in modern times. Unemployment has only just started rising and it seems highly likely that economic activity will take longer than expected to recover, not least because of the collapse in consumer and business confidence.

There could still be a stock market recovery this year, as investors start to anticipate economic recovery. But I fear even that will have to wait until 2010. I hope I'm wrong. In which case, I will be very happy to apologise.

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