By Dev Nadkarni
Most people around the world would be happy to see the back of 2011 and look forward to the January of 2012 being a harbinger of better times, despite the widespread trepidation of grim forebodings wrought by some interpretations of the Mayan calendar.
What a year 2011 has been. Disasters of all kind – whether natural or financial – have befallen the peoples of so many nations around the world. A series of hugely destructive earthquakes, massive flooding, tsunamis and dozens of tornados brought many parts of the world to the brink.
This string of natural disasters and altered weather patterns set the backdrop for climate change negotiations in Durban last month – but the world by and large decided to postpone the possibility of working toward any definite solution, avoiding confrontation.
The one that caused the most widespread concern on a global scale were the earthquake and tsunami that conspired to create a nuclear disaster in Japan, sending shock waves across the world. For New Zealand, the early part of last year was eminently forgettable. The Pike River disaster and the Christchurch earthquakes are the worst this country has seen in its history.
As if natural disasters were not enough, the worst of the global financial crisis, unfolding slowly and menacingly since 2008, came to a head last year, with countries virtually going bankrupt. What the natural disasters did to life, limb and property, the financial disasters did to people’s wealth and that of entire nations.
The situation has gotten so dire that what was one of the world’s wealthiest regions until a couple of years ago – the Eurozone – is on the brink of collapse. Fifty years in the making, the Eurozone was hailed as a great example of cooperation that was achieved among countries that were at the throats of one another fighting wars not much more than a couple of generations ago. But it has taken just a couple of years of financial crises for it to face the threat of unravelling.
A weak Eurozone could have serious implications for the Pacific Islands region this year and the next several, because many of its development programmes are tied to European aid. In times like this, overseas aid would be far lower down leaders’ priorities as they grapple to save their countries from worsening financial climes and manage tense political situations. So far there has been no official announcements about cuts to aid programmes but that cannot be ruled out given the circumstances.
At one time in the early stages of the global financial crisis, as the contagion consumed Wall Street after the Lehman Brothers implosion followed by that of several others that plunged the US dollar, the euro threatened to dislodge the greenback from its nearly five decade long reign as the currency of choice. What a sudden and precipitous fall the past year has been for what once was such a strong and desirable currency. The crisis has shown how fickle and illusory so-called financial success based on unmanageably large debt can be – as for individuals, so for nations.
The US is continuing to head for the worst of times economically. This year, its cities have seen the mushrooming of tent cities on the outskirts of many of its big cities – populated with increasing numbers of people who have been forced out of jobs and their homes into poverty. The country’s policy making machinery seems to be in a state of paralysis as the nation inches toward what undoubtedly promises to be an acrimoniously fought election.
Things haven’t been bad at all in Oceania as they are in the some countries of the developed world, particularly in the United States and the Eurozone. The banking systems in the whole of the region have generally held up well against the global crisis. New Zealand’s saga of the string of finance company disasters is a different story though. But the government has moved swiftly to put in place measures to prevent the repeat of such grief for mum and dad investors who have collectively lost hundreds of millions of dollars to the unbridled greed of dodgy finance company promoters.
Strong fundamentals of the Australian banks have fended off any possibility of a crisis in Australia or the rest of the region including the Pacific Islands, where Australian banks dominate the scene.
Is there another way to run the world?
Meanwhile, the world’s ordinary folk have grown sick and tired of what they see as a culture of unmitigated greed, fiscal irresponsibility, and unjustifiably high rewards among the powers that be – whether they are politicians, businesspeople or finance professionals. The “occupy” movements around the world have been spontaneous and have driven home a strong point – but have been no match for the entrenched vested interests they have been up against.
Chances are they will remain exactly that – just token protests, even though a magazine no less than the profile of Time has made ‘the protestor’ the person of the year, which is an interesting commentary on a phenomenon that has fired the imagination of young people around the world. But existing power structures and their vested interests are too deeply entrenched and have been so for far too long to be dislodged by mere financial crisis or a bunch of youngsters holding court in public places, no matter for how long and no matter in how many important city centres around the world.
The solutions, therefore, will have to come from well within the structures that exist within the world’s political and financial power systems. There are more flashes of realisation in the public discourse today than ever before that there may be other far more inclusive ways of running the world and sharing its wealth and resources more equitably across its 7 billion denizens. It’s unbelievable but true that some big, rich businesspeople themselves – especially in the United States – are making a case for more equitable tax structures that would make the rich like them pay more.
On the flip side of the coin, company shareholders around the world are demanding sensible salary caps on high-flying executives, while some countries are legislating to introduce caps on salaries and bonuses. These may seem small, even insignificant changes but they have the power to influence a change in the way the world has been used to look at creating wealth in these past decades where unbridled ‘greed is good’ type capitalism has held sway.
As the financial world continues to be preoccupied in sorting itself out of the super high mountain of tangled debt it has created for itself over all these years, problems of the real world – environment, food and water security – are more than likely to be sidelined this year.
But a New Year always brings new hope. There is widespread belief in the prognosis that 2012 will be a watershed year. I would like to believe that this will be so in a positive way.
Happy New Year.
First appeared in Islands Business January 2012