It’s rough out there and it might get a lot rougher. Hunker down for 2012. Or stand up, count blessings and make the best of things. There is a lot to make the best of.
Christchurch knows what it is like to be roughed up. There was a nasty revisitation just before Christmas. For the rest of us, the rough may be round the corner.
Earthquakes are by definition unknown until they happen. What we can’t know yet is whether there will be more seismic shocks in the global banking system and, if so, how much of any resultant tsunami will wash up here.
Much commentary in the past two months has centred on whether European politicians and officials might somehow gloss country debt just enough for long enough to stop big banks failing and, over time, might somehow get enough economic growth to claw back to “normal” even while forced into growth-stifling austerity.
As this was written last week, all this was holding together in Europe — just. There was much dark comment that not enough had been done and that by March Europe would be back on the brink. But that is two months away and who knows what might turn up?
Or down? There are signs Europe’s travails have slowed China, India and Brazil and thus the world. China may be about to hit a rough patch anyway. There is growing evidence of a plunge in property prices as a huge bubble, pumped up in part by massive state-fed credit in 2008, subsides or bursts.
In a liberal-capitalist economy a burst asset bubble can leave a long shadow — 10 years after 1929, 20 years in Japan after 1990, a still unknown time after the Greenspan subprime bubble. Europe’s debt crisis is best seen as a second phase of the crisis triggered in the United States in 2007-08. There may be more phases to come.
In China’s state-capitalist — or, at most, mixed-state-private — economy a property bust’s trajectory might be different. But since Holland’s tulip mania four centuries ago, all bubbles have done damage.
If there is damage from China, some will fetch up here in weaker export prices. The European damage has been in higher funding costs for our banks, which slows the small and medium enterprises which generate most economic activity, and in lower yields on government bonds, which chill investors.
The econometric models say things will be sort-of alright. But those models can’t see sharp turning points and sudden plunges. They didn’t see the global financial crisis. The forecasters might be right. But they might be wrong. It might well get tough.
By-the-book businessmen say that when the going gets tough, the tough get going. A more instructive insight comes from New Zealand journalist Kate Webb about her lifetime in Asian hotspots: “People always think I must be so tough to survive all this. But I’m a real softie. Maybe you have to be soft to survive. Hard people shatter.” (Quoted in expat journalist John McBeth’s autobiography.)
Webb was in essence describing resilience: a strong, secure core, which can withstand shocks, plus enveloping material that is flexible, elastic, compressible and adaptable, to absorb, adjust and adapt to the shocks.
In this country we have strong foundations for resilience.
First, the natural advantages: abundant water, abundant high-quality food growing and catching capacity and abundant energy in a world short of water, food and energy; less direct harm ahead from climate change than almost every other country; distance from mayhem; space to breathe and think; clear skies; and a fresh/safe/natural country brand most others would die for.
Add the institutional and social advantages: stable democratic and legal institutions; a good education system by world standards; an inventive and adaptive people; a generally liberal people who have over 25 years invented biculturalism and begun to live with multiculturalism.
New Zealand came out world No 1 in an Economist magazine chart a few weeks back which plotted lack of corruption against human wellbeing.
There are many qualifications: for example, we manage water incompetently, we bother less about our environment than crowded northern Europeans do, distance is a vulnerability, too many fail at education, there are gross inequalities and we have a quotient of illiberal people.
But by world standards this country comes out extraordinarily well. On broad prosperity measures which take into account other ingredients of the good life besides simple GDP per capita, New Zealand is always close to the top.
In another 10 or 20 years as water, food, energy and resource constraints and pestilence and political muscling disturb global peace, this place could well become highly desirable.
Oh yes, Australia will, too. It’s big, brash, rich and warm. And close and a magnet.
But for a new year’s resolution, we could latch on to our country’s huge positives and dump our usual despondency and defeatism.
That way, as soft (tough) Webb did and as Christchurch has, we might build resilience for what may be a rough 2012.