Many weeks of this year felt like months. The Lehman collapse, the weeks leading up to the election, and some weeks in November as the markets continued their relentless fall. It seemed as if the year would never end. What a foolish sentiment – “the year would never end”. As if time could be stopped or its rate of passage changed in any way. Regardless, it’s now December 31st, and the year is over. Here’s a quick recap of the year from a finance standpoint:
- There was much strain on the U.S. and the world’s financial markets. I don’t think the world has ever seen anything like this on a global basis. Domestically, 2008 was the worst year since the Great Depression, marked by steep losses (in equities and just about every other market), sensational volatility, and deep economic impact that we’ll continue to feel in 2009.
- Though the financial crisis started in the second half of 2007, the markets didn’t really freeze (and believe me – some markets like Auction Rate Securities froze solid to the core) until 2008.
- Many events completely redefined the face of the American financial system:
- 1/11: It’s announced that Countrywide Financial will be bought by Bank of America.
- 3/17: Bear Stearns failed and was eventually acquired by JP Morgan. There was much speculation around Bear’s failure – many conspiracy theories and the sort. The initial offer was $2/share, but it was then revised to $10/share.
- 7/14: Mortgage bank IndyMac was seized by the feds. Customers waited for hours in lines outside the banks branches to get their money.
- 9/15: This was probably the day that did the most damage in the year. Lehman Brothers filed the biggest bankruptcy in U.S. history. It was really the result of bad timing – had Lehman been a bank sooner or a bank later, the government would likely have saved them (i.e. Bear and AIG). But, Lehman ended up being the government’s guinea pig to see what would happen if a large bank failed. Bank of America also announced its acquisition of Merrill Lynch on the same day, and the announcement of an AIG bailout followed soon after.
- 9/25: JP Morgan bought the assets of Washington Mutual after WaMu collapsed and was taken over by the FDIC.
- 9/29: A Wachovia acquisition by Citigroup was announced, though eventually Citi would be outbid by Wells Fargo.
- Oil reached a high of $145.29 per barrel on 7/30/2008. It opened the year at $99.62 on 1/2/2008 and closed at about $40.16 on 12/31/2008 (or at least at the time of this writing). Commodity prices in general grew at a staggering pace, only to fall right back down as a global slowdown set it.
- As a result of oil, unleaded gasoline reached about $4.11 on a national average.
- U.S. equity markets posted the largest yearly decline since the Great Depression, losing about 35%. At the lowest point this year, in November, the losses were nearly 50%. The second-half of November and December bought a 20% rebound.
Besides major financial events, there were many other historical things that should be noted about 2008:
- Senators Hillary Clinton and Barack Obama fought tooth and nail to the very end for the Democratic presidential election nomination. Eventually Senator Obama would win the nomination to battle Senator McCain for the presidency.
- The world met Sarah Palin – the Republican vice-presidential nominee. This was a mixed blessing for the Republican camp, though many say she did more harm to the campaign than good. Tiny Fey should be noted here for her exceptional Palin impersonations on Saturday Night Live.
- The biggest non-financial event of the year: Senator Obama wins the presidential election. The victory was nowhere near close – something the country hadn’t seen since Bush Sr. vs. Clinton.
- California permits (though they subsequently voted down) same-sex marriages.
- The 2008 Olympic Games are held in China. Michael Phelps wins a record-setting 8 gold medals during the 2008 Olympics and sets seven world records along the way.
- Russia invades Georgia.
- China gets hit by a massive earthquake in May. There are many, many deaths, and a lot of infrastructure destruction. Looking for the silver lining, this does create an opportunity for China to invest in some domestic infrastructure projects, creating many jobs and helping support the economy during the global slowdown.
- The terrible terror attacks in Mumbai during Thanksgiving. Islamic terrorists take hostages in several landmark sites in Mumbai and the city is in a three-day siege. 171 people die and there is much anger and frustration among the Indian people.
It’s been a remarkable year, and we as a race have survived it for the better. It hasn’t killed us, and therefore we must we stronger than we were before. I, for one, am certainly ready for the year to be over and to cheer in 2009. I hope it brings us luck and better fortune than 2008.
Happy New Year everyone…