Superheroes come in all shapes and sizes. Gordon Brown is not known to leap tall buildings in a single bound, but the taciturn British prime minister was credited this week with saving the world from financial Armageddon by no less a figure than Paul Krugman, the new Nobel economics laureate. Feted at home and abroad for leading the world financial system back from the brink, Mr Brown's decisive plan to tackle the banking crisis head on has become the model for rescue packages across the globe. His comeback represents a remarkable reversal of fortune. Threatened by a summer of speculation over leadership challenges, sliding approval ratings and a resurgent opposition nipping at his heels, it looked to many observers that the domestic fallout from the global financial meltdown would be Mr Brown's undoing. But as the crisis deepened, he grew in confidence and stature. The man who presided over a decade of unbroken economic growth as former prime minister Tony Blair's finance minister had a plan. While other countries scrambled to offer depositors 100 per-cent guarantees on their savings, Britain would effectively guarantee the banks themselves. Mr Brown and his finance minister, Chancellor of the Exchequer Alistair Darling, prescribed a GBP500 billion (HK$6.69 trillion) treatment for the ailing financial system that included a massive injection of equity into troubled British banks and debt guarantees to free up the interbank lending logjam that has perpetuated the credit crisis. At the start of business this week, just five days after the plan was formed, it was put into action. The effect was immediate. Those British banks most in need - Royal Bank of Scotland, HBOS and Lloyds TSB - sought GBP37 billion in taxpayer assistance and were effectively nationalised on the spot. At a stroke, the government took control of 45 per cent of the mortgage market, prepared to install treasury officials on the troubled banks' boards and showed top executives at the worst performing financial institutions the door - minus their severance bonuses. Other banks, HSBC and Standard Chartered among them, indicated they would ride out the storm alone. Although battered by wider recession fears as the week wore on, world markets made their biggest one-day gains in almost two decades when the package took effect. Meanwhile, it emerged that Europe was adopting British-style rescue packages and that the US was ready to put aside historical opposition to state intervention. But the London Interbank Offered Rate (Libor) stayed stubbornly high and bank shares were slow to respond to the initial market rally. The traditional lure of bank stock for small investors - regular dividend payments - was snatched away as the Brown plan suspended dividends on existing ordinary shares pending repayment of the preferential shares taken up by the government. Robert Talbut, chief investment officer of Royal London Asset Management, said the package had put the banks on a firmer footing, but shareholders would be the biggest losers. 'Returns to ordinary bank shareholders are going to be pretty disappointing over the next couple of years until the preferential shares are paid off,' Mr Talbut said. 'It is wrong to believe this type of measure is going to be a magic wand and that suddenly everything is going to be OK ... but it does offer the best possible chance that we can restore confidence and get the banks operating again.' Professor Krugman, the Princeton economist and columnist who on Monday was awarded this year's Nobel economics prize, took the opportunity to heap praise on Mr Brown's intervention. Writing in The New York Times, he said that Britain, although a relatively junior partner in economic affairs when compared to the United States and the European Union, had the rest of the world playing catch-up. 'The Brown government has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions ... It went straight to the heart of the problem - and moved to address it with stunning speed. Luckily for the world economy, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.' The ringing endorsement came as Mr Brown called for major economies to abandon 'outworn dogmas' and seek new solutions to the disorder. It was a veiled reference to the ideological objections on the other side of the Atlantic to injecting state capital into banks, something akin to socialism for free-market Americans. By Tuesday it was clear US Treasury Secretary Henry 'Hank' Paulson's original rescue plan to buy up toxic bank assets was going nowhere, and the unthinkable had become unavoidable. Washington bought into the Brown plan and nine US banks were part- nationalised with a US$250 billion equity injection drawn from the Bush administration's hard-fought US$700 billion bailout fund. As Wall Street suffered the humiliation of the biggest state intervention since Franklin Roosevelt closed banks during the Great Depression, the British prime minister was enjoying perhaps his finest hour, invoking the memory of another figure of that time - Winston Churchill. Mr Brown said world leaders would need the courage shown by Roosevelt and Churchill in 1944 when they agreed on a brave new post-war financial order with the Bretton Woods system. 'Because this is a global problem, it requires a global solution,' he said. 'I propose a leaders' meeting in which we must lay down the principles and new policies for restructuring our banking and financial system all around the globe.' Critics were quick to point out that Churchill had won the second world war but famously 'lost the peace' and was bundled out of office by war-weary voters in 1945. Mr Brown may be remembered for his part in averting a run on the world's banks and saving the western capitalist system in the process, but his efforts are unlikely to see off the looming recession that could cost him his job. British jobless figures hit a 17-year high this week with 1.8 million people out of work and domestic inflation running at a 16-year high of 5.2 per cent. While Labour has rallied, with the latest YouGov/Sunday Times poll putting it on 33 per cent, up three points on last month, Mr Brown has a long way to go. Although down three points, the Conservatives polled 43 per cent, and a crucial by-election awaits Mr Brown on his home turf in Scotland. For now, he is master of the universe. Whether he can master his own political destiny when the dust settles is another matter.