SELDOM, IF EVER, have we entered a new year with so few confident expectations.

A year ago, gasoline cost a little more than $1 a litre locally and the business pages of the dailies were full of stories about the boom in Alberta. Although the election itself was 11 months away, the presidential election race in the United States was well under way, with Hilary Clinton expected to nose out all her competitors for the Democratic party's nomination.

In Canada, the economy was strong just about everywhere, the lone exception being Ontario's manufacturing sector, which would have been in real trouble had it not been for orders related to the oil sands projects then under way. Politically, we had reasonable stability, with the federal Conservatives able to govern as if they had a majority of seats in the Commons, thanks to the Liberals' disarray as leader Stéphane struggled to achieve the popularity that accompanies skills in the areas of policies and communications. And a law drafted by Prime Minister Stephen Harper's administration had set an election date in October 2009.

In Ontario, the re-election of the McGuinty Liberals a few months earlier had included a personal defeat for Progressive Conservative leader John Tory in the Toronto riding held by Education Minister Kathleen Wynne, and the expectation was that Mr. Tory would soon find an MPP willing to give up his or her seat so he could participate in legislature debates.

Closer to home, Dufferin County Council seemed close to embarking on a solution to the county's longstanding lack of a means of handling its solid wastes, most likely through construction of a gasification facility on a 200-acre site that once was to have housed an ordinary landfill operation.

Although we read occasional stories about so-called sub-prime mortgages and a related increase in the number of foreclosures in the U.S., the general expectation was that things would continue pretty much as they had for the last few years, with inflation posing as the main economic threat.

That was indeed the case until the middle of the year, when crude oil prices peaked at about $147 US a barrel and the price at Canadian pumps approaching $1.50 a litre. (Locally, the highest was about $1.40.)

Since then, we have experienced an economic domino effect the likes of which the world had never seen, the sub-prime mortgage fiasco having triggered a credit crisis and a related collapse in stock values, to the point where today stock market indices have plunged roughly 40 per cent from peak levels and governments just about everywhere have been trying to come up with workable means of stimulating their economies.

In the circumstances, no one faces more challenges than Barack Obama as he prepares to assume the U.S. presidency later this month.

Although there's little doubt that he has assembled a highly credible cabinet team, or that he's on the right track in seeing a need for universal health care, an improved educational system and better relations with the rest of the world, no one knows whether his economic policies will prevent the U.S. entering a depression equal to, or greater than, the Great Depression of the 1930s.

Of all the problems he faces, perhaps the greatest is the fiscal mess he will inherit from the (mis)administration of George W. Bush.

Although supposedly a conservative, the outgoing president chose to pick up only one truly conservative policy tool — tax cuts for the wealthy — while doing nothing to curb spending at a time when the country was conducting costly wars in Iraq and Afghanistan.

The result was mounting budgetary deficits at a time when governments elsewhere (including our own) were either balancing their budgets or following Keynesian economic theory by using surpluses to reduce their debt loads.

Enormous as the challenges facing the Obama administration clearly are, they will be mirrored to some extent just about everywhere, including even places like China and Russia.

In Canada, the challenge will be for governments at all levels to come up with wise stimulus packages, the aim being to use the economic downturn as a time to improve infrastructure to the point where an economic recovery can be speeded and made more effective through modernization.

For example, this should be a time to improve our transportation infrastructure by building and widening trunk highways, restoring rail passenger services and improving airport facilities.

In Ontario, it should also be a time to move quickly on the construction of new nuclear power plants, ideally by using both the existing and proposed Candu technology and having projects at both the Bruce and Darlington complexes.

As for Dufferin, this surely must be the year when County Council finally solves the solid waste dilemma by selecting one of the proponents of a scheme that will turn the wastes into harmless byproducts while producing some energy.

It will also be a year when Dufferin will at long last have a multi-lane highway connection with Toronto, through the widening of Highway 10 between Orangeville and Caledon and completion of the Highway 410 extension to the north end of Brampton.

But welcome as this improvement will be, it won't affect the gridlock between Brampton and Toronto, and ought to be accompanied by improvements in public transit, ideally through introduction of limited GO train service between Orangeville and Brampton or Streetsville using refurbished rail diesel cars.