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"It's crony capitalism. I don't know how to describe it, except that it is a super crony capitalist system," Chalongphob said.

When Thailand faced its financial crisis in 1997, the US and the IMF ordered Thailand to close weak banks and nationalise most of them. But now they cannot raise a finger against any of the big banks, which have been kept in a zombie-like state. US bank credit has seized up over the past 20 months. Most banks are under-capitalised. The economy is heading into a deep recession.

The US government and the Fed have spent, lent or committed US$12.8 trillion (Bt453 trillion) in rescue and stimulus attempts so far, according to Bloomberg. That's 14 times the $900-odd billion in circulation; almost equal to the entire 2008 US gross domestic product (GDP); and works out to $42,105 for every man, woman and child in America. The US GDP was $14.2 trillion in 2008.

Now the Fed has left its fingerprints everywhere in the US economy, not to mention its injection of liquidity to central banks around the world to prevent a dollar shortage. The Fed balance sheet is swollen with new money. It is keeping its printing presses humming with a pledge to buy more than $1.2 trillion in long-term government bonds and mortgage-backed securities.

An intervention of this scale can only mean that the US financial system has already cracked.

Investors and central bankers around the world are wondering about the fate of the dollar with the Fed's printing enterprise, which will eventually debase the currency value. For how long can the Fed print the dollar before holders head for the exit? Can it sustain this printing to $5 trillion before all hell breaks loose?

The Chinese are worrying the most because most of their $2 trillion in reserves is stored in dollar assets. They are now signing bilateral swap agreements with key trading partners such as Chile, Argentina, Hong Kong, Malaysia and Indonesia for instance, so that trade accounts can be settled in yuan rather than dollars.

Investors and policy-makers around the world are looking at what might transpire from the G-20 Summit. Initial reaction, as expected, has been low-key. A report from DBS Global Research yesterday said: "G-20: No surprises as to the contents of the draft communiqué. On the exchange-rate front, the group pledged to refrain from competitive devaluation. There was no discussion on the reserve currency status of the dollar. For the first time, regulation will extend to systemically important [large] hedge funds. The draft also declared an end to the era of banking secrecy, and will seek to impose sanctions on tax havens.

"Emerging and developing economies were identified as the recent engine of world growth. Hence, the need to expand resources to the IMF to help emerging economies currently facing shocks from the global crisis. Overall, the summit turned out to be a non-event for the exchange-rate market."

Yes, the G-20 Summit is almost a non-event because the leaders failed to address the black hole in the global financial system. There is some $600 trillion in outstanding derivatives out there in the balance sheets of global banks. They think that if they can regulate the banks, the hedge funds or the tax havens, or stimulate global growth, business will return to normal.

But that will not be the case, as we are witnessing a de-leveraging process. What will happen if some of the global banks start to default? Would the central banks be able to print enough money to fill up the black hole if the economy continues to deteriorate and the bank assets become more rotten?

Thai Prime Minister Abhisit Vejjajiva has joined the chorus by calling for stimulus spending to lift the world out of recession. The question is whether governments can spend their way out of the mess, against the over-consumption mode built over the past decades and the collapse of the financial system.

Chalongphob believes that the recession will last five years at least. In the case of Thailand, it took us five years after the 1997 crisis before we climbed back to pre-crisis levels in term of per capita income.

Yet no one has asked the tough question: What will happen if stimulus spending does not work because the recession lasts a decade or beyond? If the recession is far more serious than we have anticipated, we would do better to save taxpayers' money, cut costs and only spend what is needed, because we can't borrow too much before the debt load threatens fiscal sustainability.

It's time for Abhisit to call for a new national agenda to survive this global depression, starting with cutbacks on government spending on civil servants, letting weak industries go to their natural deaths, promoting renewable energies to save on imported oil, and investing in Thailand's core strength, which is agriculture.