It’s not news to report that 2011 was a tough financial year on the international front. China, this decade’s promised capitalist wave-maker, saw its economic growth continue to cool, despite inflation coming (relatively) under control. Europe started and ended the year a mess, with the bottom expected to fall out of the euro — still expected, mind you — and many of the Union’s countries hovering on the brink of bankruptcy. In only the most recent example, Greece saw retail sales drop a staggering 30 per cent over the Christmas sales period; by comparison, Sears’ post-Christmas announcement of the closure of at least 120 North American outlets is merely ‘unfortunate.’
As the 10th-largest world economy, Canada is often insulated from immediate world financial shocks — but not the long-term shock waves And we know it: a recent Pollara poll suggests we are not optimistic, with some 70 per cent agreeing the country is in the midst of a recession, and a slight majority believing our economic situation will worsen rather than improve. With consumer confidence the lowest it’s been in years, a speedy recovery seems less than likely — and that’s barring unforeseeable events like natural disasters, changes in world economic and political stability, The Rapture and/or another planet colliding with Earth.
With that in mind, here’s a look back at some of 2011’s financial issues and big news stories to see what, if anything, we can learn from them for 2012.
The Occupy Movement
One of the year’s biggest North American stories was the inequality of wealth distribution. It started with Occupy Wall Street which, ironically, had its origins in Canada — specifically, the Vancouver headquarters of Adbusters magazine. As the movement spread its tendrils into various North American cities, suddenly everyone wanted their slice of the pie. The West has always operated under the delusion that everyone has an equal chance at said pie slices, regardless of wealth and circumstance (it’s the interlinked promise of democracy and capitalism). Still, Canadians seem to be waking up to the cold, hard facts of privilege and class. The conversation about pay inequality will continue in 2012. The question is not whether the protests will get uglier, or violent — it’s whether anything will change for the better.
Italy and Spain being were Europe’s biggest headline-generators last year but, with various Union countries hovering on the brink of insolvency — including Greece’s tail-end spotlight steal — tanking economies constantly threaten to inadvertently take down the entire euro zone in the process. Even sheltered Canadians are wondering what will happen if/when the euro implodes. So far, the worst-case scenario has been band-aid diverted, as the European Central Bank lends money to its troubled nations. Still, if Europe doesn’t extricate itself from this mess, North American economic growth will likely stall.
Much closer to home, Waterloo, Ontario-based Research in Motion had its worst year ever, with sales down despite millions more BlackBerrys sold. Recent reports of a possible shake-up of the company’s board saw stock rise, but with the delay until mid-2012 for the next-gen BlackBerry 10, the company only stands to lose further ground in the smartphone wars. Let’s also not forget that headline-making four-day BlackBerry system outage last October, which showed us all just how dependent we’ve become on our devices. Whether or not RIM goes under, it stands as an exemplar cautionary tale for big business: one about staying ahead of the curve, the importance of the reliability of service, and the volatility of the tech market. The smartphone and tablet wars will only heat up more in 2012 and beyond, and the selection and variety of these infernal, addictive devices will likely become even more confounding.
The death of Kim Jong-Il in North Korea, U.S. troops leaving Iraq, Berlusconi resigning as prime minister in Italy, the Arab Spring, tens of thousands demonstrating for reform in Russia: 2011 was a year of (signs of) change in the world. Canada rioted, too — over hockey. Our reliable, balanced, often conservative economy allows Canada to (seem to) exist in its own bubble, somewhat immune to the economic and political storms buffeting the rest of the world. Somewhat; ,but for how long?
A recent Canadian Press story suggests that numbers for 2011 will show a growth of 2.3 per cent for the Canadian economy. The report also points out that “Europe is likely already in recession, setting off a chain of events that [will] lead back to Canada.” Consider that Europe is China’s biggest export market, and that China itself is in an economic cooling period, “which impacts Canada through slower demand and lower prices for commodities such as oil and metals.” So, don’t expect a sudden rebound from the recession.
If you’re looking for a safe bet, or as close to such as can be identified in these uncertain economic times, real estate might be the way to go. Investing in gold remains reliable. Don’t sell off your tech stocks just yet (unless they’re RIM). And if your inner mercenary has long been dreaming of a European vacation, now — with the euro falling — might just be the time.
Image courtesy of Nigel Appleton.