FYI | Jan 11 2011
(This story was originally published on 24th December, 2011).
By Greg Peel
It's a bit lonely here in the FNArena office today. At least it would be, were there an FNArena office. Chris Shaw has been on his break for over a fortnight and Rudi has also been on holiday hours, leaving just me.
But the deathly quiet (just use your imagination) does allow me the chance to reflect on what once again has been a year to remember, among the decades I have spent in the financial markets in one capacity or another. When I first became a financial journalist in 2004 markets then seemed destined to be headed in only one direction – boring, but satisfying nevertheless.
Then along came 2007, which became the year of the subprime crisis. There followed 2008, the year of the GFC, which was both the most alarming and exciting I've ever experienced. Next came 2009, the year of the recovery, but never were the shadows of the GFC ever far away. And sure enough, it soon became clear that all we'd really managed to do was shift the global debt problem from the private sector to the public sector.
So 2010 has become the year in which the words “quantitative easing” are now bandied about at barbeques with an air of solemn comprehension, even though the Fed's QE program actually began in early 2009. But really 2010 has been the Year of Europe.
The parallels between 2008 and 2010, particularly at the beginning of 2010, are quite frightening to contemplate. First Dubai, if you recall, and then Greece, became the public sector's “subprime crisis”. Too many commentators in 2007 suggested emphatically that the US subprime sector was so small it could never have any great impact or spark any contagion. In early 2010, many said exactly the same thing about Greece. Thus by April, we were back pushing into new post-GFC blue sky.
Who says history never repeats?
As we enter 2011 there is no end in sight to Europe's woes and subsequent fears of contagion. The only difference is a slightly more swift response this time around, albeit it took a lot of bickering among politicians to finally put an EU emergency fund in place. Is it big enough? Well that will be the story for 2011.
China, of course, is never far from the headlines. Twelve months down the track it is clear global markets still don't have any faith in Beijing making the right policy moves at the right time, but so far so good.
2010 will also be remembered for bringing upon us a seeming litany of disasters, one after the other. The months of April and May were quite extraordinary. It wasn't enough that bailing out Greece suddenly seemed like it was not going to prevent contagion at all.
We had a fraud case brought against Goldman Sachs in relation to lining up client suckers against whom subprime CDOs could be shorted. Goldmans had made a lot of money (or at least not lost it) being short mortgage securities, and its ultimate fraud settlement could have been paid out of petty cash.
We had Eyafalla…Eyjafjall…that Icelandic volcano which shut down most of Europe and for a while there threatened to really go off. Later in the year saw another volcanic eruption in Indonesia and in between the number of earthquakes and tsunamis were too many to count. And they haven't exactly settled down yet either.
We also had a bit of a burst pipe in a deep-sea oil well in the Gulf of Mexico, which slowly but surely became the worst oil spill disaster in history by several degrees. The estuaries, wildlife and livelihoods of the Gulf states will take decades to fully recover.
I hadn't really wished to bring politics into it, but you'd have to say it's certainly been a remarkable year. Most remarkable perhaps, from a stock market point of view, was the attempted imposition of a mining super-profits tax in Australia – right at the time when all the rest of the above was going on. The RSPT proved but another knife in Kevin Rudd's back, but while now watered down and out of the spotlight, the mining tax saga is not actually over yet. It was certainly a global talking point at the time.
It was a year in which the world cheered when 33 miners were safely rescued in Chile after a long interment, but in which the world fell silent once more when 29 miners tragically perished in New Zealand.
So many and varied have been the tragedies and, although seemingly few, the triumphs of 2010 that I'm sure I have forgotten some. One can only assume, or is that hope, that 2011 will not see any sort of repeat.
I said at the beginning of 2010 that my feeling was the stock market would track largely sideways over the year, drawing on my experience of the 1992 recession. I wasn't necessarily expecting such a volatile year, and it's not quite over yet, but the ASX 200 closed at 4870 on December 31, 2009. Yesterday it closed at 4799. Come on Santa — 71 more points.
I'd like to thank all our subscribers for supporting us through 2010, and all the readers who find our articles of interest. I'd particularly like to thank our correspondents who provide us with praise and with criticism each and every day, and those who myself and/or Rudi have met face to face over the year.
From all here at FNArena I wish you a very Merry Christmas, a fun New Year, a relaxing summer break, and a prosperous 2011.
I'm off on my own break now and FNArena will be taking a rest until Monday, January 17. While news stories, reports and offshore prices will not be published over that period the website will still be fully accessible, ASX data will be updated, and all our tools and archives will be available.
Rudi and Chris will be back on the 17th to fire up 2011 while I'll see you again on the 31st.
Stay safe.
