As the year comes to an end I was reminded of many unique events that happened this year. This included many major economic/business that had huge impacts. I decided to list some that made an impression on me. There were several dozen events, so I included only the most memorable ones.
January 20- Barrack Obama inaugurated
The man who ran on a platform of change and a promise to bring economic relief to the American people was inaugurated. President Obama came into office with high approval ratings and with a promise to the American people to govern in a bi-partisan matter. Unfortunately, Obama promised too much and was not able to accomplish it, which has caused his approval rating to plummet.
January 26- Banking system of Iceland collapses, Government resigns
Iceland was one of the most prosperous and wealthy countries in the world until 2007. The crisis which began in 2007 intensified on this date which caused the Government to resign. Iceland’s banks were highly over leveraged and deep in debt. It was truly a shock to see a highly prosperous nation collapse so quickly
February 17- Stimulus bill passes
As one of president Obama’s first acts, he urged congress to immediately pass an economic stimulus bill. What was originally advertised as an infrastructure bill that would create millions of jobs turned out to be a big disappointment. The $787 billion contained only $81 billion in infrastructure spending and there was much less job creation than anticipated.
March 5- S&P hits lowest level since April 1997
I remember that day that the S&P 500 hit a low of approximately 666. “Experts” were arguing how much lower the market would go the optimists estimated 500, the pessimists said the index would probably drop closer to 300. I remember how I kept buying as the market went down, and how hard it was because I too I was convinced the market was going to go even lower, why was I buying now? I think every investor will remember those days in early march. My patience paid off and I happened to buy some stocks at their lows including some of the financials and metals, which have went on to produce spectacular gains. Below are some big cap stocks that reached extremely low levels that day and have gone on to produce hundreds folds gains.
| Stock | 6-Mar | 24-Dec |
| Citigroup | 0.97 | 3.35 |
| Bank Of America | 3 | 15.25 |
| Wells Fargo | 7.8 | 27.09 |
| Caterpillar | 23.18 | 58.33 |
| Dow Chemical | 6.47 | 28.01 |
| International Paper | 3.93 | 27.45 |
| General Electric | 5.87 | 15.44 |
| US Steel | 16.97 | 58.86 |
March- AIG Bonus populist outrage
In mid march it was disclosed that AIG planned on paying bonuses of $218 million to its employees. This led to a populist outrage where AIG employees were literally threatened with their lives. The politicians went along with the outrage to try and win support from the growing populist movement.
May 7- Stress Test results released
Geithner who had gotten himself into a quandary when he had announced the stress test earlier in the year, ended the incident well. Most of the major banks were proven to be adequately capitalized. The banks that had to raise money were for the most part able to do it without many problems. The market was now reassured that the financial system was sound. This was a big victory for the administration.
June 17- Banks Begin to repay TARP
In another major success for the Obama economic team, major banks began to repay TARP. Goldman Sachs, JP Morgan, American Express and Morgan Stanley were allowed to repay the Government. This gave the market a lot of confidence that the worst of the financial crisis was finally over. Bank Of America, Citigroup and Wells Fargo followed suit by repaying later in the year.
July 28- Home prices rise
The case-Shiller index showed the first rise in US housing prices in three years. This news in addition to better housing numbers in the prior months increased hopes that housing had finally bottomed. Since July 28, the monthly case-shiller numbers have been getting even better.
Aug 25- Bernanke nominated for reappointment
President Obama announced that he was reappointing Ben Bernanke as chairman of Federal Reserve. While it remains to be seen whether he will get enough votes in the senate, the announcement was a sigh of relief to the market. While many populists were furious that Bernanke was nominated, most economists were hopeful that Bernanke is the best person to shape monetary policy until the end of this crisis.
October 28- Dow closes above 10,000 for first time in 2009
While the stock market at any given moment does not accurately portray the current economic conditions, the news was viewed as increasing confidence in the fragile economic recovery. Although the number 10,000 is no more meaningful than any other number, psychologically it was a major event for the market and the economy.
End of December- 2009 Ends off on a good note
What began as a dismal year for both the economy and the stock market, is closing on a much higher note. The S&P500 is up 24.71% for the year, and since the march lows is up nearly 70%. The NASDAQ has produced even higher gains as well as many international indexes. Some countries indexes are up well over 100% from their lows. On the economic front we got 2.2% GDP growth in the third quarter the first positive growth in four quarters. On the job and housing front it appears that both may have hit a problem.
