And celebrating: President Obama

With the eyes of the world upon him as he stood on the steps of the Capitol building, and up to two million people gathered on the National Mall, President Obama took the oath of office.

He began his inaugural address by saying that he was "humbled by the task before us": he emphasised that he took the oath "amidst gathering clouds and raging storm", but promised that the challenges "will be met". The United States' first black President said that "all deserve a chance to pursue their full measure of happiness," but highlighted the need for hard decisions.

Will it be enough? The mood in Washington and beyond is extraordinarily positive — the incoming President enjoys approval ratings of around 80 per cent. Today's events have been a celebration of hope and optimism on a grand scale.

And because hopes are so high that this new Presidency will bring a rebuilding of relations with other countries, the world outside America can feel part of the ­celebration.

But the challenges for the new President are immense, with the economy looming largest. Since his election in November, Mr Obama has signalled support for the bail-out of the car industry and for the ongoing bail-out of the banks but has also emphasised much more strongly than President Bush the need for greater responsibility in those industries. He is likely to demand that banks bailed out by the government start lending again.

Meanwhile he supported more radical attempts by the motor industry to clean up its environmental record, while he has promised to create five million "green collar jobs" by investing $15 billion a year in renewable energy.

He has also made clear that while he will withdraw from Iraq, he will ramp up the war in Afghanistan. But foreign dilemmas aside, the new President is likely to be a healer in a way his predecessor was not. He is pragmatic and his intellect is respected. The prospects for him uniting America, at the same time as he symbolises its improving race relations, are perhaps higher than for any President since John F Kennedy.

Mr Obama's success will be vital not just for America but for the rest of the world: the US bears a heavy responsibility for this economic crisis but has also, over the past century, driven much international economic growth. So we join the United States in hoping that President Obama can live up to at least some of the expectations of this extraordinary day.

Shred Sir Fred

SIR FRED Goodwin, chief executive of the Royal Bank of Scotland, was the man who, more than any other UK banker of the past decade, bet on expansion. He trumped Barclays in the battle to buy Dutch bank ABN Amro, even as the bubble in property and share prices was bursting. RBS has now been bailed out by the taxpayer for £37 billion, with more to come. Certainly Sir Fred's tendency to believe his own publicity and surround himself with people who would not challenge his world view is partly to blame. But so are the board members, including former chairman Sir Tom McKillop, and shareholders who, as so often, failed to ask enough hard questions of management.

That said, the Prime Minister's attempt to put Sir Fred into the firing line at this time of anxiety over RBS's future has its own motives. Gordon Brown had relied on Sir Fred as an adviser over many years. Just as Sir Fred pressed ahead with expansion, so Mr Brown made his claims that boom and bust were over. Taxpayers are understandably furious that Sir Fred, paid £4.2 million in 2007, and Sir Tom still enjoy their knighthoods and pensions. Unfortunately it is extremely unlikely that either will be removed but the anger of the taxpayers will have to be acknowledged.