2012 Looking Like 2008
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2012 Looking Like 2008


I recently had a chance meeting with John Brinsden, a legendary banker with a history that stretches back decades, probably five of them, in Southeast Asia. Old school and incapable of retiring, he’s currently vice chairman of Acleda Bank in Cambodia, and his opinions are worth more than most.

With that in mind – and with recession looking likely in Europe and maybe the United States – I asked Brinsden for his prognosis for the coming year. His opinion was blunt yet refreshing when lined up against the economic doomsday scenarios being painted by finance houses around the world.

In short, 2012 is beginning to look a lot like 2008.

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Back then, there was much fear and dread ahead of the collapse of some of the world’s pre-eminent financial institutions, bankruptcies, stock market collapse and job losses on a scale not seen since before World War II.

People who have their pension funds tied up in equities are well aware that the last four years have added little to their retirement plans. And, according to Brinsden, 2012 is starting to sound more like 2008 all over again, only this time the Europeans are more in the firing line than the Americans.

The Europeans are about to pay for the fiscal incompetence and greed of countries like Greece, Italy, Spain and Portugal. With comparable debt levels, France is unlikely to fare much better, and the fiscal landscape of Europe will offer a much different picture 12 months from now.

The gospel according to Brinsden is that this will provide some nasty shocks to the global economy and tip Europe dependent countries into another recession. The first test for Europe will arrive in January and February when scheduled repayments fall due on Italian bond issues.

It’s an alarming backdrop for Southeast Asia as Europe, like the United States, is a prime destination for exports, and perennial issues that dogged the region three to four years ago remain unresolved.

For example, there’s the internal political instability and lines of royal succession issue in Thailand, elections in Timor-Leste and possibly Malaysia, and Chinese belligerence over the Spratly and Paracel islands – all of which could complicate matters further.

So, will financial calamity be piled onto political uncertainty for a year of hell? Well, on a brighter note, tensions associated with Islamic militancy and the border conflicts between Thailand and Cambodia at Preah Vihear have eased, while Burma’s relationship with the outside world has improved.

But bloody mindedness remains close at hand over each of these three issues, threatening to resurface at any moment. Additionally, food security in the lower Mekong, and plans by Laos to dam the river, will strain ties with Vietnam, one of Vientiane’s few close allies.

Democracy is also about to be sorely tested.

Many of the region’s longstanding political parties are discouraged from participating even while the United Malays National Organization, the People’s Action Party in Singapore and the Cambodian People’s Party have witnessed a sharp drop in support among populations that once offered unswerving support.

It all adds up to what Brinsden – never alarming and always affable – would call an interesting year ahead, punctuated by shocks and opportunities, but one that he assures us, we will get through.

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