It's been a wretched year by all accounts, at home and abroad. What a difference a year makes! This time last year the economy was humming and our pockets bulging with fat bonuses. At least for those who had a job.
And we were having a good laugh at the expense of the Americans. Subprime? What's that? How did these clever dicks get themselves into such a hole? Ha, ha, ha! And of course we went on to congratulate ourselves on the resilience of our banking system.
But as this year ends, we're barely holding on to our jobs. We've joined the Americans - and the rest of humanity - in the ditch. We're now being battered from all sides. Systems that have stood us in good stead since World War 2 - the international monetary and financial templates crafted at Bretton Woods - are unravelling.
There are calls for the Bretton Woods institutions - the International Monetary Fund and the World Bank - to be reformed to meet the new challenges. But it's not the first time the system has been tested and found wanting. The Bretton Woods Agreement was signed in 1944, but already a year later major European countries found themselves running huge balance of payment deficits. The two bodies failed the test; and the US had to step in, becoming the world's central banker, and the dollar became the world's currency.
The seeds, which almost destroyed the US financial sector and threaten the international system, were planted in the US housing market. We're now told that a world recession is inevitable. In fact the US, we now discover, has been in recession since December 2007. And things could get worse before they get better. Who then will come to our rescue this time if the US is in peril?
There's another danger facing countries on the periphery, such as SA. Investors are quick to repatriate their capital at the slightest whiff of risk, irrespective of its location. We were therefore a bit blasé, I think, to believe that we would be left unaffected by such a conflagration. The so-called decoupling, the belief that emerging markets are not necessarily affected by economic downturns in the US or Europe, is just wishful thinking, especially in the era of globalisation.
There's some light at the end of the tunnel. George W Bush is at last disappearing into the sunset. That's cause for celebration. It's still to be seen whether Barack Obama has shoulders broad enough for the burden which awaits him. He seems to have the capacity to transcend the two vexing issues of our age: race and religion. Nor has he been seared by the post war ideological conflicts. He'll hopefully put the US right. Nothing more should be expected of him. An America that is peaceful and prosperous is almost a prerequisite for a better world.
But we should worry only about the things we can control: political stability and the sort of policies that make SA a desirable investment destination, which grow the economy and ensure jobs for our people.
There should be no gnashing of teeth at the splintering of the ANC. It's a welcome development. The biggest threat to democracy is the concentration of power in fewer hands. That breeds arrogance. Thabo Mbeki, Vusi Pikoli and the Scorpions are victims of such arrogance. We need more, not less, competition in the political process. The election will be a test of our democracy's durability.
This is the last issue of 2008. The FM is back on January 9. May I take this opportunity to wish one and all a peaceful festive season. Don't overindulge, and drive with care.
Ranking the Analysts 2009
