Looking at 2009, the good news is that the global economy is likely to recover much faster than predicted. The bad news is that global politics are likely to deteriorate much more rapidly than most expected.
From the beginning it was fairly clear that economies would pick up once governments and central banks began flooding markets with money. Provided the financial system can be kept intact, all markets eventually find their bottom. The rebound gets under way, as we saw with real estate after the U.S. savings and loan crisis of the late '80s.
But our gloom and doom media experts could only focus on the drama of the day — increasing unemployment, falls in production and bankruptcies. They have yet to realize that these are the results, not the causes, of recessions. Fortunately the panic talk has allowed people like Ben Bernanke of the U.S. Federal Reserve, who have long realized the Keynesian imperative to spend heavily in times of recession, to slip into action with a minimum of conservative resistance. The supply-siders who caused this mess, with their naive beliefs in deregulation, small government and market fundamentalism as economic save-alls, have been left spluttering on the sidelines.