At the last possible minute, the United States managed to put the brakes on a plunge over its fiscal cliff, theoretically saving itself — and by export connection, Canada — from another recession.
Not to be uncharitable, but the Jan. 1 deal does make one wonder if the timing of the whole thing was planned. Both political parties are sure to gain a chunk of political capital from their final hour rescue.
Still, it was a moment of high drama, the exciting likes of which we rarely see. Stock markets jumped for joy. Certainly millions of Americans did too, over not facing $500 billion in new taxes — money that would not have been spent on consumer goods. And consumer purchasing makes up an enormous portion of the economy.
It makes me a bit uncomfortable to say this, but good for the Americans. How often do you see political parties working together on anything constructive?
The media, of course, has immediately jumped on all the things they did not achieve, such as tackling the ridiculously massive deficit. Admittedly, if the U.S. does not manage to raise its debt ceiling quickly, the country could default, which to say the least would also be detrimental to the economy.
At minimum, though, the new deal buys the American government two more months to get its act together.
What all this may mean for Canadian farmers remains to be seen, probably in September when the U.S. farm bill will supposedly be updated. The fiscal cliff deal extended the now-expired bill.
Had it not, old laws dating from 1949 would have kicked in, with bizarre effects such as milk prices doubling.
The fiscal cliff problem, temporarily tamed, was not the only thing economists were upset about last year. They were also ranting about China’s growth plummeting, Canadian housing markets crashing and the European Union coming apart at the seams.
Yet 2012 was a pretty good year, with job numbers and housing markets improving in the U.S., the EU sticking it out and China more or less staying the course.
In light of last year’s prognostications, one has to be optimistic about this year. There are certainly issues in the global economy, but we more than muddled through 2012. We can do it again in 2013.