[ccebook.cn]The World in 2010

keep her hands mostly in her pockets in 2010: American family balance-sheets are weighed down with debt
and there is the spectre of still-rising unemployment. By the end of the crunch as many as 25m people may
have lost their jobs in the rich OECD countries: unemployment rates of “one in ten” could be the norm. In
continental Europe personal debts are relatively low, but the banks look sickly. Japan, worn out by years of
deflation, hardly seems ready to lead the way.
Indeed, Japan serves as a warning: it takes a long time to recover from balancesheet
recessions, and policymakers have to pull off some difficult tricks. Fighting
deflation first, but keeping an eye on inflation; cleansing the banks rapidly, but
keeping credit lines open; providing fiscal stimulus, but spelling out a way to cut
public debts. Do all these things well and the recovery could be more v-shaped; get
them wrong and a w soon appears. Given the record of central banks and treasuries
thus far—a little slow and clumsy, but far more systematic than Japan in the 1990s—
Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved.
For Barack
Obama, the calm
looks likely to be
especially
onerous
the best bet is somewhere in that dull heavy middle. Western economies will grow, but struggle with large
deficits, heavy public debts and stubborn unemployment.
Politics will also play a role. For Barack Obama, the calm looks likely to be especially onerous. Even if he has a
health-care reform bill before the year starts, that carries risks. In political terms, he will “own” health care:
suddenly every shortcoming in America’s system—each delayed appointment, insurance wrangle or botched
operation—will be his fault. And in 2010 Afghanistan will be “his” war, its miseries laid at his door.
The delights of dullness
This hard slog will surely bring some joy for Republicans in the November mid-terms; but it will also reveal
more about this opaque president. In 2009 there was plenty of flam—symbolised by the meaningless Nobel
peace prize, awarded for good intentions. Can he be tough, not just with Iran, Russia and North Korea but
also with allies such as Germany (over troops in Afghanistan) or Israel (over settlements in Palestine)? Can he
lead the way on climate change, the ultimate hard slog? Will he drift to the left, as businesspeople fear? Will
he stand up to the protectionists in his party—or can we expect more sorry populism, such as the tariffs on
Chinese tyres?
For British politicians the going will be even heavier. Gordon Brown faces the grim prospect of probable defeat
in a May election. For David Cameron, any joy in the Tories regaining power after 13 years will soon be muted
by the fiscal mess Mr Brown will have left behind. Huge spending cuts beckon. At its best this offers a chance
to reinvent government; but, given the vulnerability of Britain’s economy, the timing will be tricky.
The Anglo-Saxon distress will doubtless prompt Schadenfreude across the English Channel. But Europe too has
its woes: inflexible labour markets withstand recession well but are slow to recover. For all their bankerbashing
rhetoric, Angela Merkel and Nicolas Sarkozy are likely to push ahead with mild deregulation. After
eight years of wrangling about the Lisbon treaty, the European Union would be wise to find a few opt-outs for
Mr Cameron (to shut up his more rabid Eurosceptics), and then focus on the single market and further
enlargement.
None of this will be quick. After two years of drama—economic collapse, rollercoaster markets, Mr Obama’s
election—2010 may feel rather dull. Better that than the alternative.
John Micklethwait: editor-in-chief, The Economist; co-author of “God Is Back: How the Global Rise of Faith Is Changing the World”
(Penguin/Allen Lane)
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