It's common knowledge that the new Obama administration is scrambling to pull America out of two big holes that the Bush administration helped dig - the biggest economic crisis since the Great Depression and a major decline in America's image abroad, which essentially has undermined U.S. power.

On my current trip to the Middle East, I'm hearing a lot about these two dynamics and the interplay between both. It's not just that America is less admired in the Middle East compared to when I first started coming to the region more than 15 years ago - America was never well-loved in these parts. The Bush administration's overall approach to the region didn't win us many new friends and alienated millions at a popular level. In addition, it didn't actually strengthen our hand and increase our power to reshape regional trends to our advantage.

Repeatedly setting sky-high goals wrapped in vague and lofty rhetoric and then not actually meeting those goals - whether it was expanding freedom and democracy or advancing the Arab-Israeli peace process in a meaningful way - the Bush administration weakened America's ability to influence events. Saying that you'll do something and repeatedly not delivering results created a credibility gap.

And it's not just about U.S. foreign policy - the recent financial crisis and economic downturn has hurt America's image. During our visit to Dubai, which has become the major financial and banking hub in the Middle East, we heard a lot about the negative impact of the financial crisis on America's power. America has taken a double hit to its credibility, and how it cleans up the banking and economic mess impacts our image in the region, particularly in a place like Dubai, which has sunk billions of dollars into the United States.

When people talk about steps that America needs to take to improve its image abroad, they usually focus on what the U.S. government does. All of the talk about President Obama's first television interview after taking office with the Arabic language satellite channel Al Arabiya has faded in just a few short weeks. But actions speak louder than words. The people we've seen on our trip so far are anxious to hear more about what the new administration will do on foreign policy.

Equally important - if not more so - is how America as a whole addresses the banking and financial mess. Just a year or so after a wave of concerns about the transparency of sovereign wealth funds (SWF) - including many based in the Middle East - and how these state-owned investment funds were changing global finance got a lot of attention, many Emirati business and government leaders were pointing the finger back at the United States - with one prominent leader we met with telling us - "Look, it was your hedge funds and leading banks that caused this mess." The full story of course is that millions of investors jumped on the bandwagon of these risky investments - many of the people who were pointing the fingers during our trip were themselves complicit in creating this global mess.

But given the strong and leading role that America's financial and banking sectors had in leading the world down this path and the global perceptions about what has happened in the economy, how we clean up the financial and banking mess will matter much more in re-shaping America's public image than who becomes the next Undersecretary of State for Public Diplomacy.

What the Obama administration does on foreign policy and public diplomacy matters a great deal in improving our power and influence in places like the Middle East, but it is only part of the story - what our corporations and the private sector does speaks volumes in shaping America's image.

P.S. In one of the comments on my last post, a reader asked if I was writing these posts on the trip at the behest of my hosts. It's actually quite the opposite - the posts I've been doing on this trip apparently raised some concerns from our hosts in the Emirates, which I find quite curious. I'll write more about this dynamic - because these types of trips for think tankers and oped page writers are quite frequent, more than most people realize, I think. It raises some interesting public policy questions.