A year on the brink

On both sides of the Atlantic, the politics of bravado and brinkmanship will be seen in 2013, says Joseph Stiglitz

THE year 2012 turned out to be as bad as I thought. The recession in Europe was the predictable (and predicted) consequence of its austerity policies and a euro framework that was doomed to fail. America’s anaemic recovery was the predictable (and predicted) consequence of political gridlock, which prevented the enactment of president Barack Obama’s jobs bill and sent the economy toward a “fiscal cliff”.

The two main surprises were the slowdown in emerging markets, which was slightly sharper and more widespread than anticipated, and Europe’s embrace of some truly remarkable reforms — though still far short of what is needed.