When this column urged readers last New Year's Day to make a resolution to be optimistic, it was reflecting the sentiments of the season despite deep economic gloom. Few would have boldly predicted then that stock markets would end the year back at levels last seen before the collapse of Lehman Brothers. Optimism has prevailed, thanks to unprecedented intervention by governments to halt a financial meltdown. The narrow escape from global economic depression climaxed a decade of events and change that will shape the new decade.
With the world recovering from a financial meltdown, parallels are to be found with the beginning of the first decade of the new millennium. Then, Asia was emerging from its own financial crisis and the global dotcom bubble was about to burst upon financial markets. Between then and now, the world has enjoyed a period of relative economic stability and growth.
Some may find reasons for optimism in that. But comparisons can be misleading. The financial meltdown was a systemic failure that went global. Economic stability remains dependent on worldwide government support for spending and investment to maintain growth in emerging economies and prevent a slide back into recession in developed countries. Such stimulus must be maintained until economies are once again able to stand on their own feet.
Economic malaise
The decade began with the US revelling in its economic ascendancy. The bursting of the dotcom bubble, and the exposure of giants like Enron and WorldCom as facades of creative accounting, did nothing to shake its faith in its financial system. Bankers and investors turned to housing and created another bubble, using financial instruments they did not really understand. By 2007 defaults in the subprime housing mortgage market had transmitted the first warning signs, but few anticipated the calamity that lay ahead and led to the freezing of world credit markets.
Some big American banks have repaid billions in bailout funds to the taxpayer, but many other lenders have closed, the government has committed trillions to supporting the US economy, property prices remain depressed and American household debt relative to income is still historically high. As a result of this and similar debacles in Europe and Britain, the decade has ended not only with serious debate over the merits of unfettered, Western-style free-market capitalism - a subject close to Hong Kong's heart - but with questions over the primacy of US power in the world, given its economic malaise and the rise of China and India.
Were it not for the financial meltdown and its aftermath, the rise of China as a world power, climate change and terrorism would dominate a review of the past decade and a preview of the next.