The United States is still the world's largest economy ($14 trillion) but is also the biggest debtor. Its ability to keep spending is due largely to the largess of China, the world's largest creditor, with $2 trillion in reserves and a continued willingness to hold T-bills in order to prop up its biggest customer.

While the financial crisis has affected almost all countries, lines can now be drawn between those who have cash and reserves, and those that don't. The ones that do - China, Russia, Brazil, Saudi Arabia, Japan, Norway - are in the catbird's seat. Those that don't - ranging from tiny Iceland to the United States - are facing the constraints of being debtor nations.

But while the structural reality of the world has changed dramatically, the cognitive reality hadn't - until now.

If you had followed the coverage of the summit of the world's leading economies (the so-called "G20″) held in Washington on November 15, you could be excused for thinking that the meeting was a flop. Other than vague promises on the part of the collected leaders to do something about the world financial system, there was no bold plan announced, no specific solutions to the world's problems. The coverage in the United States treated the summit as a non-event that amounted to a photo-op for world leaders and a lame-duck American president.

In fact, however, the G20 summit revealed a developing world brimming with confidence about its ability to solve current problems and a developed world lost in the mist. That was reinforced at the meeting of Asian-Pacific nations last week in Peru, which led to the declaration: "We are convinced that we can overcome this crisis in a period of 18 months," the leaders said in the statement. "We have taken urgent and extraordinary steps to stabilize our financial sectors and strengthen economic growth." Sometimes rhetoric matters, and the fact that most affirmative statement of confidence in the ability to solve the current credit crisis came not from New York, Washington, or London speaks volumes to the world as it now is.

Today, the rest of the world is forging new links with one another in recognition of the fact that they will have a central role in shaping the future. That is why outside of the United States, images of President Hu of China speaking candidly with President Lula of Brazil, or both huddling in serious discussion with Singh of India and Medvedev of Russia matter. For years, these countries looked to the United States as either an adversary or a bulwark, and assumed that in the end, action by the United States would determine outcomes for better or worse. No longer. The contrast between the Washington summit, where the U.S. leader was mute and ineffectual, and the summit a week later in Peru where the tenor was "yes we can!" rather than "how can we?" was stark.

For sure, banks in many parts of the developing world have taken hits, as they were exposed to the same toxic assets that have brought the credit system to its knees. Yet banks in many of the emerging countries are not as vital to the system, especially in places like China or parts of the Persian Gulf, where government spending and state-capitalism are the major source of economic activity. 50% of China economic activity is spending by the state.

The developing world is now helping bail out the financial system of the developed world, with cash injection (Abu Dhabi into Barclays; Prince Alwaleed of Saudi Arabia in Citigroup, and soon perhaps China into AIG) and developed world governments are abandoning the model of bank-led capitalism and taking a much larger role in the economy. "Their" model of strong state intervention in the economy is now the one becoming universal, not "ours."

The crisis has radically shifted the way that the emerging world views its role. To borrow from psychology, the implosion of the western financial system has created that cognitive break, and rather than finding themselves brought low, emerging nations have been able to weather the storms. They have faced no strong outcry domestically and if anything have gained in stature by swift and strong action to address root causes and fix what's broken. China's vast $600 billion dollar stimulus package is one example; Abu Dhabi guaranteeing the debts of Dubai is another; and President Lula of Brazil declaring an end to the developing world's dependency on finance from the developed world yet another.

Having been forced to abandon the psychological dependency on the United States, they are taking responsibility for shaping the world around them. In the past week, there have been major meetings between Russia and Brazil, between China and Brazil, between China and multiple countries. Many say that the lesson is no longer to treat the United States as wiser and stronger economically, and not to look to Washington for lasting solutions. The crisis is their wake-up call about their own importance, and they are seizing the moment.

Given the despair and confusion in the developed world, this is a good thing. The global system is too big for any one country to sustain it, and while it'ss a painful time, it might just lead to greater balance and stability going forward. The new leaders recognize that no one of them can create that world alone. With the new Obama administration in Washington, and Hillary Clinton at the State Department, they might find a partner who understands that as well.

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