If success breeds confidence then the lack of confidence in global markets right now implies significant failure – or at least a petrified fear of failure.

Decoupling is now a major risk (as you would have read in a multitude of media sources already) due to stagnated growth in some Western economies, making it almost mathematically impossible for countries like Greece, since they aren’t growing at a rate that makes it feasible, to pay down their colossal public debts.

Fear of default has created a crisis of confidence, pushing bond yield spreads higher for some indebted nations and triggering a likely self-fulfilling prophecy of default.

Over the next few weeks, work is being done behind the scenes to recapitalise some European banks to a level that could facilitate a Greek exit from the Eurozone.

Let’s jump forward to November, and a presumption that Greece will be allowed to exit in an orderly fashion (still very painful but not as painful as an impromptu forced exit triggered by another global financial crisis).

The reality is that global debt (government, corporate and personal) is vast – currently running at 266% of worldwide GDP.

In the UK, the Government’s robust bid to tackle its own share of this debt – having bailed out half a dozen banks at the height of the previous crisis – could potentially cripple its economy as the Tory-Lib Dem coalition has slashed Government spending too fast and too hard, according to many observers.

The structural shift away from many public sector jobs to a hopeful stronger reliance on private sector jobs is yet to manifest (not surprisingly), and combined with high inflation has put a squeeze on many UK households not seen since the 1920s, according to available data.

The resultant risk is that the UK economy may slip back into recession, making it more difficult to raise the taxes needed to pay down the debt – a double whammy.

And while there is only a 17% chance of an impending UK recession, according to the World bank, the velocity of events during the first financial crisis could see the likelihood of a recession rise dramatically if confidence in the system (well, at least the viability of Europe) is allowed to take root.

Cutting spending is fine; the decision to do so was broadly supported in the UK, however, the challenge facing many Governments including the UK is how to cut costs and grow at the same time?

Greece will not achieve this balance. The level of structural reform required to make it a competitive economy will require at least a decade, according to those close to the matter – too long a period for markets and creditors wanting to be paid.

The head of the IMF, Christine Lagarde, stressed this point strongly over the weekend, when stating that sovereign fiscal responsibility needs to be married with a plan for growth – otherwise sooner or later, debt obligations could force more nations into a similar situation to Greece if markets lose faith and government bonds yield intermittently rise steeply, as happened for Italy, Portugal, and Spain recently.

If the current crisis of confidence is allowed to persist past November – in six weeks when the G20 meet in France to formalise loose measures put in place last week in Washington – the outcome could be catastrophic.

In 2008, events reached a crisis point very quickly indeed once the dye was cast and Lehmans was allowed to fail.

This time around, a full-blown crisis of confidence will breed more than was seen the first time around as it is likely to trigger the greatest winter of discontent the UK and the rest of the world have ever seen.

Decoupling for Japan has been a disaster over the past two decades; a decoupling for Europe and the US at the same time would drag all emerging markets down with them too.

Confidence, as they say, is everything.