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Source: ONE News
In the corner of my bedroom sits a pile that's now grown to almost a metre high of old Time and Economist magazines.
Somewhere under there, long since overwhelmed, is a magazine stand.
Finally summoning the motivation to cull the pile this week, I flicked through some of the headlines of 2011.
What a depressing read.
"Just as the world was recovering" reads the ominous headline from the Economist's March 5th edition.
Indeed it was. Just as we were hoping this could be the year
that the post-financial crisis
'greenshoots' finally bloomed, the rug was pulled out from under
that fledgingly recovery.
We discovered that the foundations of that recovery were built on worse than sand - they were built on overwhelming levels of debt.
Cutting spending and hiking taxes to cut that debt was the first port of call, as well as turning again to those who had so many tricks up their sleeves during the Financial Crisis just a few years ago - central banks.
But the cupboards were largely bare there, too.
Under the headline "Reviving the world economy" the front page of the August 13th edition of The Economist carried a cartoon where a group of suited men are crowded around a corpse.
One man holds the paddles of a defibrillator in his hands and is saying "Stand back, I'm a central banker".
Except few central banks could do much to shock their respective economies back to life. In most cases interest rates were already so low and in some cases so much money had already been printed that there was nowhere left to go.
America's central banker, Federal Reserve Chairman Ben Bernanke repeatedly disappointed those betting on him announcing a third round of money printing or quantitative easing.
The alternative ploy "Operation Twist" he announced in September, which was designed to bring down longer-term interest rates, also underwhelmed.
But Ben Bernanke knew he had no economic elixir of life to pour into the mouth of the economy. He told Congress in October that "Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the US economy."
He was, of course, also taking a subtle pot-shot at politicians. Haven't they done well this year?
In Europe I have long since lost count of the number of times a summit of leaders was called with the aim of finding a solution to the debt crisis, causing investors to pin their hopes on the outcome, only for it to disappoint.
The two lynch pins keeping the Eurozone together, Germany's chancellor Angela Merkel and France's President Nicholas Sarkozy, even had to publicly declare they would not (publicly) disagree on the measures required, such was the nervousness caused by divisions in their respective stances.
In the US they were no better.
A deadlocked Congress bickered until the very last second over legislation to cut Government debt, but raise the country's debt ceiling in the meantime to allow the Government to continue to operate.
That plan of course didn't appease credit rating agency Standard and Poors which took the unprecedented step of cutting the country's triple-A credit rating to double A+.
That week Time magazine's cover proclaimed it "The Great American Downgrade".
The Chinese took the opportunity to take a stab, with China's state-run news service, Xinhua, writing "The US Government has come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone".
Perhaps, but China has made a lot of that borrowing possible.
Dangerous economy
The downgrade took up many column inches and had analysts furiously analysing what it might mean.
So far, it's meant little. The US Government's cost of borrowing actually got cheaper on bond markets than it was before the downgrade. Over-indebted European countries must look upon that somewhat jealously.
If you were one given to looking on the bright side, you could say 2011 was a year full of dire economic warnings, but few actual calamities.
The US downgrade was one, our own downgrade was another. As were predictions that Italy's cost of borrowing shooting past the level that saw other, smaller, European countries go cap in hand for a bailout, would topple the country and take the whole Eurozone down with it.
Except I'm sorry to say those events, among others, still pose a threat.
Time magazine on November 21st proclaimed Silvio Berlusconi to be "The man behind the world's most dangerous economy".
Berlusconi may no longer be the man behind it, but Italy remains a dangerous economy.
At home, little may have changed as a result of our credit rating downgrade but the need to change our debt levels is no less urgent.
What is to come?
I'd like to tell you that 2012 is full of promise. In some
respects, it is. The repair and rebuild of Christchurch will give a
boost to the construction sector probably larger than it is
equipped to handle.
For mortgage holders, interest rates are likely to stay low for
much, if not all of 2012.
America's economy seems to be picking up some steam so, with a little luck, our currency might not be so consistently high next year.
But plenty of what next year promises is not promising, at all.
'Europe' and 'austerity' - need I say more?
My magazine rack, now unburdened, is ready to again be overwhelmed.
I just hope the news they bring will be not be so overwhelmingly
negative, but if this year is anything to go by, the less you
expect the more you'll be pleased.
Read more Nadine Chalmers-Ross opinion
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Add a Comment:
Post new commentnztifosi said on 2011-06-03 @ 17:26 NZDT: Report abusive post
Just when my family was making headway financially the government chose to cut tax and put GST up. At the same time funding to the school I work at was cut resulting in an hours cut for me. Result? We are now worse off than ever before! And now we are supposed to spend, save, donate to Canterbury and every other charity as if the current situation were the working man's fault. It is the speculaters and the financiers along with the government who got us into this mess! -now they can get us out!
deltics said on 2011-05-19 @ 12:38 NZDT: Report abusive post
Saving isn't what NZ needs right now, it needs to pay off it's debt AND increase spending. Money paid into KiwiSaver doesn't reduce our current debts and doesn't circulate around or stimulate the economy! So it actually makes a lot of sense for the government to reduce the incentives to pay into KiwiSaver whilst emphasising the need to be more prudent in our spending (paying down debt) without closing our purse strings too tightly in the process.
ceejaygee said on 2011-05-15 @ 12:33 NZDT: Report abusive post
i currently pay 4% into kiwi saver i would like to pay 6% unfortunately there is no provision for that hopefully the govt have thought about that. as to the tax credit cut not a clever idea, maybe they could make it totally tax free then we could really save for our retirement then they could cut the tax credit altogether
Danthetaxpayer said on 2011-05-14 @ 19:10 NZDT: Report abusive post
I would also like to ask how is it retirement savings are even a priority when we fail so badly as a country to take care of our children? Children who are meant to be our future taxpayers helping to fund future NZ Super? Children who are often neglected, illiterate & who struggle to get the medical assistance they need due to health care shortages and whose families often have to fundraise? Why are these things not a priority?
Danthetaxpayer said on 2011-05-14 @ 19:07 NZDT: Report abusive post
I'm confused: how is it saving when most of the 1.67 odd million people with Kiwisaver are probably receiving some kind of government assistance. Assistance is for hardship and to meet basic needs - food, clothing, shelter only. If they have enough spare to put into Kiwisaver which then gets matched by more taxpayer funds earned by the hard work of others, then isn't this the horse before the cart? Further, how can it truly be savings when we are borrowing $300 million each week?