It was Asia that provided some balm


SINCE the Mayan End of Days fell flat last month and so many pinched themselves in mortified disbelief, perhaps last year ought to be commemorated for the disasters that did not happen.

First up is the euro. It's still there. Amazing, given the frenzied doom-mongering over its collapse following the 2008 great recession.

The premonitions did not bear out because European governments were able just barely to muddle along towards closer fiscal and financial union. Most of the credit, literally and figuratively, should go to Mario Draghi, who committed the European Central Bank (ECB) in July, as his American counterparts had before, to do "whatever it takes" to save the eurozone.

"Quantitative easing" or, among others, an open-ended pledge by the Federal Reserve to buy distressed bonds had been decisive in rescuing the United States from catastrophe in 2008. Such extraordinary central bank measures may be controversial, but even the frugal Japanese are getting in on it. During elections last month, incoming Prime Minister Shinzo Abe campaigned for the Bank of Japan to raise its inflation target so more cash could be pumped into the economy.

Draghi deserves to be the Financial Times' 2012 Man of the Year. As soon as he spoke in London, markets rallied and the sinking feeling of imminent European disintegration evaporated. By year-end, sighs of relief had morphed into whispers of growth.

"In retrospect, the July declaration -- which in effect dared financial markets to challenge the ECB's unlimited firepower -- may well be seen as a turning point in the three-year-old crisis," the Financial Times said in its citation.

Not that it became easier over the last 12 months to decipher the glyphs of sustainable recovery. Of the 17 eurozone economies, nine are still shrinking; some, after revisions to estimates since 2008, in bone-crunching double digits. Unemployment in most of the continent remains high. In Spain and Greece, a quarter of workers are jobless.

But the signs are present for those who want to find them. Borrowing costs have stabilised; even Greece has seen a debt upgrade, to just above junk status. The hardest hit are no longer about to go bust and threatening to take the eurozone down with them. Those under the harshest austerity, such as Latvia and Ireland, have, after enduring torture, started to revive.

This is no argument for squeezing budgets. Economies will eventually recover anyway, but at great cost to people's lives. What austerity seems to have done is forced a heavy-handed structural adjustment and lifted competitiveness. Costs have been lowered and exports have increased -- the best economic news to come out of Europe in the course of a dismal year.

Plodding and petulant though they were, European governments did far better than America's, where disunity and discord appears not to have been eased by another major event that failed to take place: the election in November of Mitt Romney.

The relief was short-lived, however. Well before the Christmas turkey got cold, the world was treated to a breathtaking display of partisan politics as Democrats and Republicans in the US Congress dared each other to push the nation, and the rest of the planet, into recession in a needless dispute over taxes and spending.

Romney might have flip-flopped about trampling on the poor if he had won the presidency. But it is hard not to fault his Republican Party for an obstructionism that belongs more to the Third World than Lincoln's republic.

Michael Cohen, writing in London's Guardian on New Year's Day, was not exaggerating by much when he observed "the extraordinary, almost mind-boggling level of nihilism, stubbornness and hypocrisy that defines the modern Republican Party."

The "fiscal cliff" should have been one more calamity that did not come to pass. But the deal that was approved well past the last minute was only partial and temporary, postponing another dust-up over the debt ceiling and government expenditures for a couple of months.

A surer defying of omens occurred in Southeast Asia, long expected to follow its export markets in the West into contraction. This did not happen last year. On the contrary, the region outperformed just about everywhere else. Bursa Malaysia, for one, closed the year at a record 1,688 points.

Myanmar was last year's star-turn, but Asean's sleeper hit was the Philippines. For this "sick man" among tigerish neighbours "at long last, the tide is turning", the Financial Times' David Pilling and Roel Landingin reported on Dec 27.

"Just as many of the world's best-performing countries of recent years -- including Brazil, India and even China -- are sagging, the Philippines is stirring into life. Last quarter, its economy again surprised on the upside, growing 7.1 per cent and notching up its 55th straight quarter of growth."

President Benigno Aquino managed the courage and will to make peace in Mindanao, an internationally acclaimed success that Malaysia had a hand in.

(Putrajaya had worked long and hard with amenable Philippine governments for years with little in the way of result or acknowledgement. NST columnist Prof W. Scott Thompson mentioned some of that effort in his 2011 biography of Fidel V. Ramos, who was president from 1992 to 1998.)

Few predicted Aquino would do so well. In fact, 2012 was a year, like all previous years, in which most predictions did not come true.

An interesting sidebar of the US presidential election was that of Nate Silver and a few other number-crunchers who predicted the electoral college outcome exactly. Silver's book The Signal and the Noise ought to be required reading for all political pundits, the class of forecasters who most frequently get it wrong.

Reviewers also enthused about Nassim Nicholas Taleb's Antifragile, which posits that the really big upheavals are not preventable and could even be useful forms of creative destruction.

At least half of Taleb's theory might fit the Mayans. The ruin of their civilisation was not due to any preordained cosmic cataclysm but the wholly unpredicted arrival of conquistadors armed with their various poxes.

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