Almost every pundit and financial journalist is talking up the recovery of the world economy, while crossing their fingers and scarcely believing their own hype. But the only recovery we are likely to see will be a re-inflation of asset bubbles by bankers and speculators who, over the past year, have benefited from billions of dollars in government life support.

Last week there were cheers on trading floors as the Dow Jones hit 10,000 points for the first time since the crisis began; in London the FTSE rose above 5000. Investment bank Goldman Sachs is set to pay US$23 billion in bonuses this year, the highest in the firm's 140-year history, with average payouts of US$500,000 and some individuals expected to receive US$30 million or more.

The champions of free enterprise at Goldman's have accepted at least US$23 billion in government aid since the crisis broke – US$10 billion under the TARP scheme, and a further US$13 billion from the bailout of insurance giant AIG which had sold credit default swaps (CDS) to Goldman. CDS were in effect each-way, heads I win, tails you lose, bets taken out with AIG by hedge funds and investment banks. Almost inevitably writing CDS led AIG to bankruptcy but incredibly, the US government used taxpayer dollars to pay out on the bets.

On Monday, USA Today printed a gushing profile of billionaire investor, Wilbur Ross, for whom "foreclosed homes, failed banks, and toxic assets" are a "once-in-a-lifetime opportunity". Ross made a killing by buying up securities issued by ailing giants like Citigroup but, crucially, guaranteed by the federal government. In other words another riskless investment backed up by tax dollars. Unsurprisingly Ross is pleased. "This was a brilliant move on Secretary Geithner's part and really helped revive the markets much quicker than anybody anticipated," he told USA Today.

In the UK, Royal Bank of Scotland, which received 37 billion pounds in government aid, has denied rumors that it will be paying out multi-million pound bonuses at the end of the year. What is not in question is that CEO Stephen Hester is set to "earn" nearly 10 million pounds in 2009. Hester has agreed to defer payment of some of the money, which in plain English means he intends to take every penny once the media storm over bankers' pay has subsided.

Meanwhile on Friday, United Nations Secretary-General Ban Ki-moon said that for the first time in world history, more than one billion people are going hungry. Hundreds of millions were plunged back into absolute poverty in 2008 as speculators forced up the price of food at the tail end of the pre-crisis frenzy. Following the financial crash, investment and aid to the poorest countries dried up, while food prices remained high, says the FAO.

The International Labor Organization estimates the crisis will push up the number of unemployed by between 18 and 30 million worldwide. Since the recession began, the US unemployment rate has doubled from 4.4 percent to 9.5 percent. More than 3.6 million US workers have lost their jobs over the past 13 months. Lost jobs mean lost homes; nearly 940,000 US homes were re-possessed in the three months from July – September 2009. If this recession follows previous patterns, the jobless rate will continue to rise for the next two years. The contrast between the fate of the people and the profiteers could scarcely be plainer.

Last September unregulated markets, shadow banks, hedge funds, incomprehensible derivatives and asset bubbles combined to the create the perfect storm. Public anger with bankers and their inflated pay reached boiling point and politicians queued up at microphones to preach reform of the world financial system. But two G20 summits later, not to mention countless other forums, discussion papers, announcements and communiqués, precisely nothing has been done.

Now the "recovery" is under way, all talk of reform is being quietly forgotten. The politicians who promised it are in no position to deliver or have changed the subject. After his gutless performance on health care reform, Barack Obama, less than a year in office, is already a lame duck, with public approval ratings of minus 10 percent. UK Prime Minister Gordon Brown, who had more to say than any other world leader on financial reform, is sleepwalking to political oblivion. Another big talker, Sarkozy, is busy denying nepotism charges after his son was given a top government job. Angela Merkel, reelected and freed from the shackles of coalition with the SDP, is free to become the German Margaret Thatcher she always intended to be.

The lack of financial reform is no real surprise given the revolving door of top staff between governments and the major banks. Bush's Treasury Secretary Hank Paulson earned US$170 million during his stint as CEO of Goldman. Obama's key economic advisor Lawrence Summers was paid US$2.5 million in speaking fees by Wall Street firms in 2008 alone, a figure that includes US$135,000 for a single day's work at Goldman Sachs. It is hardly an exaggeration to say that, in the world's largest economy, policy is being made by bankers, for bankers, with economists and financial journalists as their paid hacks and cheerleaders. Perhaps the only good news to come out of the crisis so far is that increasing numbers of ordinary people are no longer fooled.