Things we learned and in some cases didn’t expect in 2012

As 2013 dawns,

(1) The world is still here — Mayan interpretations forecasting global destruction were wrong

(2) The Euro is still here — thank Super Mario (Draghi) and the willingness of the ECB to do anything to save it. This bought perhaps another year, but without write-downs in Greece and renewed growth, the Euro remains in jeopardy.

(3) Assad is still here (or in Damascus, anyway) — thank Iran and Russia and no thanks to the NATO powers, who have stood by as 45,000 have perished. But unlike the Euro, Assad seems on the way out, thanks to the courage and determination of the Syrian people.

(4) We fell off the fiscal cliff and yet bounced back within hours. Still, the cliff rescue just moves us to another precipice, this time over the debt limit and federal spending. Is this any way to run a government? No — but be prepared for more of the same as the intense polarization of American politics continues.

(5) The Great Recession is indeed Great. Five years on, unemployment across the rich countries remains elevated, in some places to depression-era levels. Growth has fallen sharply in Brazil, India, Turkey, and China as well. Europe looks set for continued stagnation, but the U.S. economy is looking stronger. If emerging markets and the U.S. revive, the world economy can move forward despite a lagging Europe and indeed help pull Europe out of crisis. But if self-imposed austerity continues to damage Europe, and gains traction in the U.S., then recovery may drag on another five years. This is bad, because there will be more drags on the world economy as the Chinese labor force starts to shrink after 2015, and retirement by western baby-boomers accelerates.

(6) Peace between Israel and Palestine is further distant than ever. With Egypt and Turkey moving toward greater Islamism and hostility to Israel, Israel convinced it must rely on building ever taller fences and bigger buffer zones to protect its people, and Hamas emerging feeling strengthened from the recent shelling of Israel, the prospects of trading for land for peace or mutual recognition of Israel and Palestine have shrunk quite a lot.

Predictions for 2013 will come in the next post.


About jackgoldstone

Hazel Professor of Public Policy at George Mason University
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