You can put a price on goodwill. If you have goodwill and fifty cents, the total value of your assets is precisely fifty cents.

If that sounds too cynical, take the case of Barack Obama. Despite his domestic difficulties, the President still retains massive goodwill around the world. Yet all that goodwill did not prevent his total isolation at the recent G-20 Summit.

There is a fundamental difference of opinion on the best strategy to come out of recession. At last year’s London Summit of the G-20, the President, then newly elected and with a media image unmatched since JFK, still found himself in the minority in his belief that governments should borrow more in order to fund a massive stimulus.

Since then, his own stimulus package in the United States has had unimpressive results: true, it has prevented – or at least postponed – the loss of some jobs, but it has hardly kick-started the economy. The Obama Administration’s response has been to suggest more of the same.

Meanwhile, international opinion has moved in the other direction. “Austerity” is Order of the Day in most European states. Gordon Brown, the only major leader who shared the President’s approach in London has since lost his own job as Prime Minister of the UK. The new Coalition government in Britain sees cutting the deficit as the priority.

To be fair, in traditional Keynesian economics, a slight reflation coming out of a recession is no bad thing – emphasis on “slight” and “just coming out of recession”. Problems occur when weak politicians become addicted to reflation, “slight” becomes massive, and they do not know when to stop.

In any case, Lord Keynes would have been horrified by the deficits many governments, including the UK and the US, were running up even before the recession. It is one thing to allow a little “cyclical deficit” by reflating a bit at the right moment in recession, but these are “structural deficits”, the products of deeper, longer-term problems. Those problems have to be tackled and reflating simply puts off the day of reckoning.

So what we all face is a long hard slog out of recession. There are no magic short-cuts, and any attempts to wander off looking for them will only delay recovery.