Articles in 2008

Friedrich Nietzsche had once said 'Hope is the worst of all evils for it prolongs the torments of man'.

Never before has this statement proven truer than it was in 2008. The year began with an uneasy calm in the markets; rumors about sub-prime loans played in the background. Economists were still debating whether we are in a recession, the consensus was that it will feel like a recession but we will successfully skirt a technical one. The Dow Jones had hit an all time high of 14,164 in October and the mood was that of cautious optimism, and even though we knew there would be a few hurdles we hoped the only way was vertical. Then Northern Rock hit followed by Bear Sterns. The market crashed. Everybody thought it was the market bottom, and it proved to be true only for a few months. We had a nice prolonged three month bear market rally. Then oil hit an all time high, everyone was worried about inflation. Then out of the blue Indymac got into trouble, then Meryll Lynch, then Washington Mutual, then Lehman, then Fannie and Freddie and then AIG all were blown away. Goldman Sachs, Morgan Stanley, Citibank, Hank Paulson, Bernanke, the Congress, Oil, General Motors, LIBOR, Derivatives, Russia the Retailers all freaked out at once. Even uncle Buffet had to come out of the closet to calm our nerves and remind us that this too will pass.



Below is a list of articles that summarizes all that happened in 2009 in the world of finance. Some are philosophical, some funny and some simply state the plain truth. These are not in my order of preference, and I necessarily do not share all the author's opinions.



1. This article discusses twenty one of the dumbest business moves in 2008. Two of my favorite ones – Henry Paulson asking for $ 700 billion from an angry congress and putting up a condition that his actions should be non reviewable by any administrative agency or the court of law. The second one is an Obama aide’s gaffe on NAFTA. (1)
2. Jim Kingsdale from Energy Investment Strategies starts with a thoughtful Chinese parable and philosophizes on the uncertainties of societies, economies, humans and life in general. It’s a pretty light hearted article considering all the carnage we have been through. I personally loved his Good Luck - Bad Luck parable and he carries the sentiment admirably throughout the report. (2)
3. By now we all know economist Nouriel Roubini had predicted the sub prime crisis long before anyone knew trouble was brewing. Ever since the beginning of the year the New York based economist had been crying hoarse over the fragility of the financial system, screaming all over the media that the problem is a lot more than just a cyclical recession. This is his written testimony to the United States congress from way back in February of 2008. He pretty much lays out all that had to happen and predicted trillion dollar losses before the term even entered our lexicon. (3)
4. This article by Pat Regnier from the Money magazine asks the question 'Is it all over for Stocks?'. The 2008 crisis and all that followed have shaken our confidence in capitalism and the market economy like never before. This article questions all their own recommendations and assumptions about stocks and bonds in general. (4)
5. Fortune magazine in this article looked back towards its recommended stock picks for 2008. They have consistently outperformed the S&P 500 over the past three years and are disappointed that this time around they ended up almost even. Meryll Lynch (MER) with - 78 % and Electronic Arts (ERTS) with - 69 % were the biggest losers. Berkshire Hathaway was down 31 %. (5)
6. Every bear market needs its scapegoats. This time around its Alan Greenspan. The genial wizard of the nineties gets replaced by this ill defined monster of a creature we all like to point and say ‘He is the man who screwed it all up’. This article from the New York Times challenges the Greenspan legacy. Alternatively harsh and poignant; asks some important questions. (6)
7. Professor Robert Shiller from Yale University was another economist who had foreseen profound problems in the financial system. According to him the meteoric rise in the housing prices were driven by what he calls "animal spirits". He claims it can be partly explained by behavioral economics. This video contrasts the housing Bubble in the United Kingdom and the housing bubble here in the United States. He explains how the monetary and fiscal policies of the two countries were different, yet both led to extraordinary housing bubbles in both countries. He makes a lot of sense. (7)
8. We have all been bombarded with news on the Madoff scandal. I am kind of fatigued of reading all the Madoff articles that have pored out of the news media. Just to put things into perspective the following article gives us brief look into the real Charles Ponzi. It has a 1930’s Hollywood feel to it. A nice read. (8)
9. Paul Krugman, author of ‘The Return of Depression Economics’ and New York Times columnist writes this article strongly arguing for applying the Keynesian model and an FDR’s new deal to lift us out of misery. He advises the new Obama government on what to do to fix the economy. (9)
10.This satirical article ‘Recession-Plagued Nation Demands New Bubble To Invest In’ from the Onion. An analyst states, ‘Every American family deserves a false sense of security’. Excellent article and thoroughly entertaining. (10)