What could 2012 hold?
It is, in the immortal words of someone much wiser than I, “the economy, stupid”.
As the New Year turns, it is still hard to determine which will come first: an individual massive bank failure that spooks the entire global financial system, bringing others crashing behind it, or the default of a sovereign economy, causing the disintegration of the euro altogether.
What is undeniable about 2011 is that the capitalist model ran out of road. What once was intimate and national – banking – has gone global, and the governance of financial activity that was once equally intimate and national has not gone adequately global.There is no global regulator. Hence extraordinary financial deals are conducted across borders in nanoseconds that are neither effectively regulated, nor, in many cases fully understood.
The horror of the sub-prime mortgage scandal in the US in 2008 that signalled the scale of what was going on has not been addressed.
In 2012 therefore the stage is set at many levels for financial and consequent economic disaster.
In Europe the ECB (European Central Bank) staved off catastrophe by printing half a trillion dollars and allowing over three hundred banks to draw upon it. But that has only “kicked the can down the road” – my key City source tells me it may have bought three or four months. The euro may or may not have as long.
But it is not just the economy. The greatest threat to world peace lies in the 21st century’s “great game” between two of the world’s biggest oil producers – Iran and Saudi Arabia. Somewhere below the surface in Syria, both are present. The great Sunni/Shia battle is under way. It is being acted out in a contained way in Saudi itself, and in Bahrain, and principally – for all to see, in Pakistan. Pakistan is a big country to watch in 2012.
2012 is a daunting prospect and may provoke some return to “small is beautiful” thoughts – the renewal of community and neighbourhood amid shared austerity. Let’s hope so.
Follow Jon Snow on Twitter: @jonsnowC4