KEY POINTS:
The Queen once famously described a year (it was 1992) as her "annus horribilis", a Latin phrase for "a horrible year".
While not quite reaching that nadir of grimness, 2007 did no favours for the business community.
One commentator on Newstalk ZB recently referred to 2007 with a
more modern simile, borrowed from rugby, as "a year of two halves". That description is certainly apt.
For the first half of the year, the unleavened spirit of spendthrift and excess marched on.
Retail spending continued in early 2007 as though Christmas had never ended.
House prices continued on their merry way skyward. It seemed that in Auckland you could only get a garden shed for the price of a three-bedroomed house anywhere else in the country.
Then came the two pronged attack of Dr Bollard's series of interest rate hikes, combined with the global impact of the credit squeeze.
The Reserve Bank raised the OCR on four consecutive occasions, between March 8 and July 26. The Governor had warned New Zealand that unless we curbed our trend of rampant consumerism on the back of our plastic credit cards, and instead developed a savings mentality, that he would act to curb inflation.
So as Kiwis realised, by August, that their mortgage payments were going to take ever-increasing chunks out of their pay packet, they were then hit with the repercussions of a global credit crisis.
US banks and financial institutions had got themselves way too deep into what the Americans call the "sub-prime" loans market - basically, high-risk housing loans granted with a very lax credit history requirement on the part of the borrower.
When it all went pear-shaped, lenders were faced with huge book losses. Money became a very tight commodity and only a concerted effort of cash injection from the world's central banks near year's end alleviated the liquidity crisis and gave some hope for recovery in 2008 - although plenty of economists are still predicting a US-led recession next year.
On the local front, our readers rated the collapse of 13 finance companies as the single over-riding business news story of the year.
The demise affected big players like Nathans Finance, Provincial and Bridgecorp and smaller fish like Western Bay, Clegg and Co and National Finance 2000.
McDouall Stuart's New Zealand Finance Companies 2007 report estimates that New Zealand has about 400,000 retail debenture investors, and of those, 50,000 have been affected by the failures.
A company's credit rating became all-important in investor confidence, but unfortunately trends like these tend to gain their own momentum, and a rapid run on funds can debilitate even a sound finance company which would otherwise continue to do just fine.
In total, about $1.1 billion was wiped off debenture holders' value this year. New rules about disclosure should improve things for the average investor in 2008, although for some, the pain felt this year will precipitate a new strategy in the next 12 months. KiwiSaver, anyone?
The sharemarket has offered little solace this year. Acquisitions by private equity firms have seen some NZ institutions disappearing from the NZX boards, whilst newcomers to the market are mostly minnows.
Some of the NZX's top companies are either under due diligence or subject to takeover talk, including SkyCity, The Warehouse and Auckland Airport. Number two listing Fletcher Building has said it is considering a move to Australia.
The disappearance of companies of this magnitude, to go with others such as Abano Healthcare and Yellow Pages, would be a crippling blow to the bourse.
In October, NZX head Mark Weldon went as far as saying the New Zealand sharemarket was "fragile". A government-sponsored think-tank is getting together early in 2008 to brainstorm ways of reviving the somnulent NZX.
I'd like to think they will emerge with some realistic and achievable outcomes. Your average Kiwi equity investor will certainly be hoping so.
We don't even want to entertain the notion of that ultimate CER move - amalgamating the NZX with the Australian exchange. They've snaffled up pavlova, Phar Lap, Split Enz and Russell Crowe already - enough is enough!
The kiwi dollar had a roller-coaster year, rising to levels not seen in 20 years. Our dollar broke through the US80c mark in mid-year, prompting the Reserve Bank to enter the currency markets and sell off an unspecified amount of New Zealand dollars in an attempt to drive down its value.
The Reserve Bank's main adversary was the "carry trade", where risk-hungry investors borrow in low-interest-rate countries such as Japan and Switzerland and buy high-interest-rate currencies such as the kiwi and the aussie.
Despite a brief fall into the 60s it has remained about US75c since that time and will stay close to the US80c mark as we enter the New Year. Exporters' groans are audible in the face of their diminished returns.
The employment market has been very tight this year - just ask any employer whose been seeking skilled staff to fill vacant positions. That wooshing sound you can often hear is the rush of skilled and talented kiwis heading across the ditch for higher salaries and a (perceived) better standard of living.
So the year ends with a polar opposite of the way it started. Although the Christmas season will undoubtably see the surge it always does, consumer spending is in retreat as people put their household budgets on hold.
The only region where retailers can hope to smile in early 2008 is the Waikato, as dairy farmers spend their big Fonterra payout.
The housing market has unquestionably levelled off. Real estate agents report that the number of days that the average sale takes is moving from 30 days, up towards the 40-day mark. The numbers of house sales have slowed.
Real Estate Institute figures show the national median sale price for November was $352,000, compared with $330,000 in November 2006. That annual rate of growth is markedly slower than the decade that preceded it.
Figures from Quotable Value NZ paint a bleak picture, showing the average house sale price was $393,000 in November, down from $406,176 in October.
The ANZ said in its economic commentary last week that house price growth was basically "flat".
When you consider that realising a capital gain on their home has been the sole source of most New Zealanders' investment plans for the last 20 years, this news brings home the truism that all good things must come to an end sooner or later.
So let's raise our collective glasses, see off 2007 with suitable formality, and welcome in 2008.
Things can hardly get worse (uh oh, better not say that - Julius Caesar was of that opinion and look what happened to that empire.)
On March 31 next year, Telecom faces its day of division into three parts. Let's hope that days prefaces a period of optimism in the telecommunications market that spills over to the rest of the business community.
In the meantime, enjoy your holiday and don't give business or finance even the slightest thought for the next few weeks - apart from checking out our upcoming summer series on nzherald.co.nz, Survivors - SMEs who have gone the distance. There's lots of uplifting and inspirational reading to be found in nzherald business reporter Sineva Toevai's series on the battlers of the small-to-medium sized business scene.
Apart from that, I recommend you just take a copy of Lee Iacocca's gritty biography to the beach and savour the sweet sound of lapping waves on the water's edge. Take a break - after the last 12 months, you've deserved it.
* Steve Boughey is the editor of the Business section of nzherald.co.nz
