The Story of the year…The US Economy

The year of 2008, was a year of many major news stories. Stories about record breaking sporting events, history making political events, controversy and tragedy in the entertainment industry, etc… Sports had the story of Michael Phelps, and his unprecedented 8 gold medals in a single Olympics, which were held in a Communist Governed China. In the entertainment industry, you had the controversial stories of figures like Britney Spears, the tragic untimely death of Heath Ledger, and deaths of many major actors. The United States had to deal with the Salmonella scare and finally in the political realm, the United States voted in our first black president in the history of the United States. Even though Barack Obama was elected President, his story did not match the attention that was given to America’s faltering economy. The United States’ economic meltdown, which caused a global economic crisis, was the biggest story of 2008, which also seems to be carrying over into the New Year.

By the end of 2008, the DOW was down 34%, the S & P 500, the MSCI Europe Index, and the MSCI Asia Pacific Index faired much worse. In just under a year’s time, the DOW went from a high of 14,164 in October of 2007, to a dramatic 46 % decline to 7,552 on November 20.

This year was also the year of the corporate bail outs. Beginning in March with the bail out of Bear Sterns, a faltering investment bank, the government would go on to bail out entities such as major mortgage companies, Fannie Mae & Freddie Mac, the insurance giant AIG, and in October the Senate passed the $700 billion bailout named the TARP program.

In September, Lehman brothers were denied government protection by the Treasure Secretary. This would lead to the Global recession. Goldman Sachs and Morgan Stanley, two of the most successful investment banks became regular commercial banks. The United States also had the dilemma of banks hoarding their cash for bad mortgages and withdrawals in bank runs. This action lead to a credit freeze that caused cash shortages for many business’ such as Circuit City, Ford, General Motors, etc…

As it has been for the past several years, gas prices averaged over $3.00 a gallon. This would in turn cause the citizens of this country to conserve their income and not purchase as much consumable products from retailers. Fuel prices have been a big cause of the down turn in this nation’s economy for about the past decade.

~ by Lisa on January 8, 2009.