Dec 31 2008

2008 – The Economic/Financial Year in Review

“And ye, who have been met with Adversity’s blast, And been bow’d to the Earth by its fury; To Whom the twelve months, that have recently pass’d Were as harsh as a prejudiced jury – Still, fill to the Future! and join in our chime, The regrets of rememberence to cozen, And having obtained a New Trial of Time, Shout in hopes of a kindlier dozen.” – Thomas Hood

 

For me personally, and I suspect for countless others as well, 2008 was a year that will be hard to forget.  As with any period of time, there were good things that happened, but the widespread economic distress, a number of devastating world events and a particularly nasty U.S. presidential election leaves me grateful that 2008 is behind us.  I haven’t a clue what is just around the corner, but for the moment let’s all be hopeful that 2009 will be a better year.

 

Before we completely move on – I thought it would be fun to list a few events from each month…lest we forget completely.  So hold onto your seat!

 

January 2008 – 1.  Crude oil prices surge past $100/barrel on New York Mercantile Exchange; 2.  Gold reaches new record of $865.35/ounce; 3.  Dow Jones Industrial Average fluctuates around 12,000 with several significant drops upon news of probable recession.

 February 2008 – 1.  President Bush announces Federal Budget of $3.1 trillion and near-record deficit of $410 billion; 2.  U.S. Congress approves $168 billion Economic Stimulus Package; 3.  The Northern Rock Bank is formally nationalized by the British Government.

 March 2008 – 1.  A U.S. Dept. of Labor report shows that the U.S. economy lost 63,000 jobs in February; 2.  The price of Gold reaches $1,000/ounce for first time ever; 3.  U.S. investment bank Bear Stearns gets emergency funding from J.P. Morgan Chase with Federal Reserve Bank of New York backing.  Bear Stearns is ultimately purchased by J.P. Morgan Chase for $10/share.

April 2008 – 1.  EU announces investigation into bailout of Northern Rock Bank in United Kingdom; 2.  The World Bank announces a package of emergency measures to tackle the dramatic rise in basic food prices which has led to civil unrest in much of the developing world; 3.  The S&P/Case-Shiller Index of U.S. real estate pricing shows decline of 12.7% from February 2007 to February 2008 with 12 of 17 regions showing declines.

 May 2008 – 1.  U.S. Federal Reserve System auctions off over $24 billion in treasury securities to help relieve the subprime mortgage crisis; 2.  Crude oil futures contracts reach $120/barrel on the New York Mercantile Exchange for the first time; 3.  The U.S. Fed reports that the industrial output of factories, mines and utilities fell by 0.7% in April in a broad-based decline led by motor vehicles.

 June 2008 – 1.  Bank of England says that new mortgage approvals in the U.K. in April were at record lows; 2.  Ireland’s ESRI says the country is in grip of a recession for the first time in 25 years; 3.  General Motors announces it will close pickup truck and SUV plants in Canada, U.S. and Mexico eliminating over 10,000 jobs.

 July 2008 – 1.  Fed Chairman Ben Bernanke assures U.S. House of Representatives Financial Services Committee that Fannie Mae and Freddie Mac are in “no danger of failing”; 2.  Zimbabwe introduces new 100-billion-dollar bank note as annual inflation rate hits 2.2 million %; 3.  Governor of California Arnold Schwartzenegger acts to end budget crisis by firing 22,000 state workers and cutting the pay of 200,000 more.

 August 2008 – 1.  United Kingdom home repossessions rise by 48%; 2.  Unemployment in U.S. rises to 5.7% which is highest rate in 4 years; 3.  New York Attorney General Andrew Cuomo reaches a $7 billion settlement with Citigroup to buy back auction rate securities from about 40,000 clients.

 September 2008 – 1.  Despite growing unemployment and economic woes, Boeing machinists strike against Boeing over outsourcing, job security, pay and benefits; 2.  AIG seeks emergency $40 billion loan from the U.S. Federal Reserve; 3.  Bank of America negotiates to buy Merrill Lynch for $38.25 billion in stock; 4.  Lehman Brothers files for Chapter 11 bankruptcy after British Bank Barclays and Bank of America pull out of emergency buyout talks; 5.  Goldman Sachs and Morgan Stanley, the last two independent investment banks on Wall Street, become bank holding companies as a result of the subprime crisis.

 October 2008 – 1.  President Bush signs $700 billion bailout bill after it passes the House of Representatives; 2.  German Chancellor Angela Merkel announces that Germany will explicitly guarantee the deposits in banks held by its citizens; 3.  Dow Jones Industrial Average drops 800.06 points, its biggest intraday drop ever; 4.  Dow Jones Industrial Average falls to 8,579.19 points; 5.  Global markets fall steeply on fears of a major global recession; 6.  G7 finance ministers announce a plan to combat financial crisis by using “all available tools” to support key institutions and prevent their failure.

 November 2008 – 1.  Barack Obama is elected President of the United States of America and promises to do everything possible to stabilize the economy and bring greater prosperity to all Americans; 2.  U.S. Government announces second bailout of AIG Group for roughly $150 billion which is the single largest bailout of a private company in U.S. history; 3.  Crude oil futures close at $54.95/barrel; 4.  Citigroup announces it will cut 75,000 jobs by early 2009; 5.  IMF approves $2.1 billion rescue package for Iceland following its complete financial wipeout.

 December 2008 – 1.  U.S. Dept. of Labor reports non-farm payrolls contracted by 533,000 in November, worse since 1974; 2.  President Bush announces $17.4 emergency bailout of General Motors and Chrysler to protect each from bankruptcy; 3.  On the final day of the year, the Dow Jones Industrial average ends up 108 at 8,776.39.

 

Let us ring in the New Year with optimism and never in our lifetimes forget what created the Great Financial Tsunami of 2008.

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Dec 25 2008

‘Tis the Season

“What is Christmas?  It is tenderness for the past, courage for the present, hope for the future.  It is a fervent wish that every cup may overflow with blessings rich and eternal, and that every path may lead to peace.”  – Agnes M. Pharo

 

Probably like you I am feeling slightly more subdued this Christmas.  This is not to suggest that I am not hopeful or that I don’t have much to be grateful for.  I realize that I am far better off than much of humanity and I feel blessed to have a great family, my health, a home, a job, etc.  At the same time this has been a sobering year for most Americans – present company certainly included.  All I have to do is check the value of my stock portfolio and suddenly a wave of queasiness washes over me.  The financial tsunami that has reached nearly every corner of the world by now started here in the good ole U.S. of A.  Our collective greed and short-sighted foolishness has at least temporarily knocked us way below the lofty position we enjoyed for so long.  As a student of history I know we can come out of this in a better place and I firmly believe we will.  For now we must deal with our mess by remaining optimistic, working hard to truly add value in whatever we do for a living, and helping as many others as we possibly can.

 

What is my point in saying all this?  Well I just want to spread the news that we are all on this ride together – now probably more than ever in the history of mankind.  So on this one day in the year of our Lord 2008, I suggest you push all this mess aside and find a reason to think about the meaning of Christmas.  A baby was born in a manger over 2,000 years ago and he grew into a man that would change the world forever.  He wanted us to care for one another and be willing to forgive.  He also made it quite clear that it is far more important to give than to receive.

 

Merry Christmas.  Peace on Earth and good will to all men.  May this day be the beginning of a brighter future for us all.

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