AFTER one of the worst weeks for economic news since, well, the week before, America and Britain now seem to be in a race as to who will be the first to dive over the recession line. It is shaping up to be a photo-finish. But who wins in the end is secondary to the appalling direction in which we are heading. Little wonder that in Britain there are strident calls for new leadership, and that across America and Europe so many are cheering for 'all-change' Obama.

A head of steam is building up for 'New Deal' politics: a set of policy actions that will help cushion the economic downturn. There are comforting assurances that it will not be nearly as bad as the 1990-92 recession, so no such New Deal mentality is warranted. But can we really be sure?

Last week brought news from several fronts to suggest that it is going to be every bit as bad, if not worse, than 1990-92. The housebuilding industry says that the plunge in sales, orders and activity is the worst it has experienced since the Second World War. On Friday, British Airways, announcing an 88% plunge in profits, blamed the collapse on the "worst trading environment" the aviation industry has ever experienced.

The latest CBI Distributive Trades Survey is a shocker, with the negative balance of retailers reporting higher sales showing its worst reading since 1983. House prices, meanwhile, have now fallen nine months in a row, mortgage lending approvals are at a record low and the chief executive of HBOS now believes house prices could be down by as much as 20% by the end of next year.

In America the economy has held up relatively well, with some encouraging items amid the gloom. But interest rates have already been slashed to 2% and Americans have been given a $600-a-head tax boost to help staunch the damage. These are remedies we can only dream of here. But despite them, America's economy still looks destined for recession.

Domestic consumption, accounting for 71% of US GDP, barely grew in June. The financial sector has been decimated, with continuing huge write-offs and provisions. GM, the country's biggest car maker, has just reported a 20% slump in sales in North America and staggering second-quarter losses of $15.5bn. Unemployment has now hit 5.7% and the number of jobs lost in the first seven months of the year has hit 463,000.

And the prognosis? Worse to come.

Little wonder voters are yearning for a new presidency that will spare us from this Herbert Hoover misery, deliver a Rooseveltian New Deal and wipe this despairing slate clean. Here in the UK there is growing clamour for a change of Prime Minister. The present one is considered too hapless, too miserable and just too utterly uninspiring for the problems piling up.

But the problem with the credit crunch – a malign convergence of improbables that include soaring oil, sharp rises in foodstuffs and a deepening housing collapse – is that it does not lend itself to easy quick-fix solutions. However, those steeped in political and economic psychology will be quick to point out that it's not the apparent intractability of problems that matters, it is confidence in a political leadership that is critical to a sense of hope and recovery. Without confidence, nothing can change for the better.

This was the great lesson from the Rooseveltian era. It was Franklin Roosevelt who was able to conjure up the alchemy of hope. But, ironically, it was Herbert Hoover, the man whose presidency was broken by the Wall Street Crash and who is forever associated with economic misery, who put in place many of the programmes for which Roosevelt took credit and which are now associated with the New Deal era.

A revisiting of the Hoover era is instructive. First, it becomes clear how the economic debate now raging in America is eerily reminiscent of the arguments that marked the Depression era: the stand-off between the radicals who urged government intervention and massive public works programmes to lever the economy out of depression; and the orthodox 'liquidationists' – Schumpeter and others who argued that the evaporation of credit should run its course and that intervention would only delay recovery.

Hoover was elected in 1929 in a Republican landslide and four years later lost to Roosevelt in a Democrat one. But was history fair to him? He had fundamental beliefs in the limits of government and the importance of individual and voluntary effort. But his response to the onset of the Depression was interventionist to a degree unprecedented in the history of the United States.

He was an engineer by background and an accomplished activist reformer. "Words without actions are the assassins of idealism," he declared.

He was clear on what led America to one of the worst decades in its history. "Before the storm broke, we were steadily gaining in prosperity. Advances in science and invention opened vast vistas of new progress. Being prosperous, we became optimistic – all of us. From optimism some of us went to over-expansion in anticipation of the future, and from over-expansion to reckless speculation, and abuse of financial power."

To the bursting of that reckless boom came bank collapses across Europe. "New blows with decreasing world consumption of goods and from failing financial institutions rained upon our people," he declared in his 1932 nomination acceptance speech. "The worldwide storm grew rapidly to hurricane force and the greatest economic emergency in all the history of the world. Unexpected, unforeseen violent shocks with every month brought new dangers and new emergencies to our country. Fear and apprehension gripped the heart of our people in every village and city."

In those disastrous years, unemployment grew to one in four of America's workforce. But by the time that Roosevelt entered the White House, the foundations of what we now know as the New Deal had been put in place. The Hoover administration sanctioned some $600m in federal government public works. He made provision for $1.5bn of loans to "self-supporting works" to increase employment. He strengthened the capital base of the network of federal land banks to help farmers avoid bankruptcy.

He assisted the setting up of the National Credit Association that helped save hundreds of banks and his administration set up the Reconstruction Finance Corporation with a capital of $2bn to uphold bank credit.

It was during the Hoover administration that the powers of the Federal Reserve banks were strengthened and a new system of home loan banks put in place. The Hoover administration also pressed for a moratorium on German government debt repayments and it was a Hoover-appointed commission that paved the way for an additional three million acres of national parks.

These combined programmes were unparalleled in the history of depressions of any country and in any time, he declared.

It was all the more remarkable given Hoover's opposition to higher taxes and raising federal government debt, and his commitment to individual and voluntary effort to lift the economy out of the trough. He declared: "It is not the function of the government to relieve individuals of their responsibilities to their neighbours, or to relieve private institutions of their responsibilities to the public, or the local government to the states, or the responsibilities of state government to the federal government… Where it becomes necessary to meet emergencies beyond the power of these agencies by the creation of new government instrumentalities, that they should be of such character as not to supplant or weaken, but rather to supplement and strengthen, the initiative and enterprise of our people."

Noble sentiments, but they did not spare him from being buried in the Roosevelt avalanche of 1932. Many of the actions of the current US administration echo the pioneering work of the Hoover years. Will Obama be the new Roosevelt with a New Deal programme? And where is the equivalent in the UK. Do we have leaders with ability anywhere near the scale of the problems we now face? And with Hoover's guts?