There were some big stories in 2008. The US elected its first black president, China staged a spectacular Olympics and the world worried about Iran's nuclear programme. But one event dominated them all: the glogal economic meltdown.
2008: Money: where on earth did it go?
If money makes the world go around, then the ear-splitting screech you heard in the waning months of 2008 was the sound of the wheels of the global economy braking as it lurched from one crisis to another, uncertain about the road ahead. In any other year, the rise of a member of a historically marginalised racial minority to leader of the most powerful country in the world might easily rank as the top news story. So, too, might the Olympian entry onto the international stage of the world's most populous nation, China. Even escalating worries over Iran's nuclear programme and President Mahmoud Ahmadinejad's denial that Tehran was building nuclear bombs ("Nuclear weapons are so 20th century") might warrant top billing. But for the sheer impact it had on people's wallets, company coffers and national treasuries - and more importantly, its probable impact in the uncertain months and years ahead - nothing mattered more in 2008 than money: money vanished, money squandered, money stolen. In retrospect, the worst economic crisis since the Great Depression should have come as little surprise. The global banking system had been living dangerously high on debt for years. High-risk investments and loose lending kept the music playing and the profits rolling in. But in mid-September, the tune changed to a dirge, as venerable pillars of the international financial system started to tumble. As the reckless bets of months and years, especially on mortgage securities, were called in across the system, there was precious little actual money to cover them. Lehman Brothers went belly up. Morgan Stanley and Goldman Sachs were forced out of investment banking. The sixth-largest bank in America, Washington Mutual, went under, marking the biggest bank failure in US history. The British government nationalised two banks and Germany drew up a bank bailout plan worth up to $645 billion (Dh2.36 trillion). Not everyone, however, got the message the party was over and that a grimmer, more volatile, era had begun. The Republican Party's presidential candidate, John McCain, declared that the "fundamentals" of the US economy were "strong" - a gaffe that probably helped cost him the election. And a week after the insurance giant AIG received an $85bn government bailout, 70 of its top employees enjoyed a week-long retreat in California, replete with banquets, golf and spa treatments. The cost: $440,000. Those in the US and Europe who took malicious delight in the misfortunes of the very rich quickly lost their smirks when they realised the values of their homes and retirement accounts, as well as the money they had set aside for the education of their children, had plummeted or evaporated. Their chagrin was compounded when it soon became clear who would foot the bill to save banks, companies and industries from ruin: the taxpayer. By the end of 2008, taxpayers in the West were set to cough up more than $2trillion in various rescue and stimulus packages. In the twilight of an administration that ran up an estimated $10.35trillion in debts while in power, making the world's money troubles even worse, the best public explanation George W Bush could muster was, "Wall Street got drunk, and we got a hangover." No one was immune from blame for the meltdown - not the agencies who rated credit-worthiness, not government regulators, not credulous borrowers and investors, not the banks or investment houses themselves. Even Alan Greenspan, the powerful former chairman of the US Federal Reserve and the reputed "God of Money", was forced to admit he had made a mistake in opposing attempts to regulate the easy money policies that helped funds flow into high-risk investments. "I found a flaw," he said. Thanks for letting us know. Those beyond the shores of America and Europe who thought their distance from Wall Street and the epicentre of the crisis would spare them pain were soon disabused of that notion. Here is something we learned in 2008, in case it had not quite sunk in before: there is no longer an "epicentre". Banks and investment funds had been intertwined for a long time and were often underwriting each other's heedless risks. With much of the global economy depending on US consumer spending, the news that Americans spent $102.8billion less than they did the month before had predictably calamitous results. Thus, by year's end few had been spared economic woes. Across the globe, some $25trillion in the value of stocks went up in smoke. Mongolia saw runs on its banks. Argentina nationalised pension funds. Iceland went bankrupt. Japan fell into recession. Honda dropped out of Formula One auto racing. The economies of India and China, once thought immune to the crisis, began to slow. As the storm clouds gathered, oil and money-rich Gulf countries such as the UAE boasted with their trademark confidence that they were the calm eye of the hurricane. Their self-confidence was understandable. For the first half of 2008, they enjoyed extraordinarily high oil prices, with the cost of a barrel hitting a whopping $147.25 on July 11. Yet the insistence there was a "calm eye" was just as anachronistic as an "epicentre". As the global economy slowed, so did the demand for oil. By Dec 19, the price of crude had plummeted 77 per cent to $33.87 a barrel - a four-and-a-half year low. The cash flows of Russia, Venezuela and Iran, as well as Gulf countries, suffered. Real estate was quick to follow. In the UAE, the bank loans and foreign buyers that property developers depend upon started to dry up, even as Nakheel announced plans to build a 1-km high skyscraper, hundreds of metres higher than Emaar's Burj Dubai, the world's tallest. By late 2008, the nation's leading developers had suspended work on pending projects, laid off workers and scaled back plans for high-profile ventures. The plunge also wiped billions off the value of the Abu Dhabi Investment Authority, the world's flushest sovereign wealth fund. After assuring that the real estate sector was "witnessing a healthy correction", Mohamed Ali Alabbar, chairman of the Dubai property giant Emaar and head of the hastily formed Financial Advisory Council, declared: "Yes, we recognise the new reality. Make no mistake." To be sure, 2008 was not just a year when money disappeared, "new reality" or not. An investment group led by Sheikh Mansour bin Zayed, the brother of Abu Dhabi's Ruler, bought the English Premier League's Manchester City for $123 million. The Abu Dhabi Investment Council purchased a 90 per cent stake in the Chrysler Building, New York City's art deco jewel for an estimated $800m. Meanwhile, a 25-year-old from Abu Dhabi named Saeed Khouri bought a licence tag for $14m at a charity auction, and Nakheel and Kerzner International threw a $20m party to celebrate the opening of Dubai's Atlantis resort. About $7,450 at the Skyview Bar in Dubai's Burj al Arab hotel also bought what is reputed to be the world's most expensive cocktail. And for an unspecified amount, the Tamweer Group and Nibras Media purchased the rights to stage a Middle Eastern version of the Eurovision Song Contest. Elsewhere, an average of $2m liberated a vessel captured by Somali pirates in the busy shipping lanes of the Gulf of Aden and $2.4bn financed the US presidential campaign. US Republicans spent $124,487 to outfit their vice-presidential candidate, Sarah Palin, and her family, and a right-wing Israeli candidate for parliament said Israel should pay each Palestinian family $250,000 to move out of the West Bank. Amid the hurly-burly of money lost or spent, some events with profound consequences passed virtually unnoticed. For the first time in human history, there were more people living in cities than in rural areas. Also, the polar bear was listed as an "endangered" species - the first animal to be added due to global warming. As we turn the corner on a new year, perhaps the majestic creature's fate is an apt metaphor. In 2008, due to the global financial meltdown, the ground under everyone's feet shifted. Assets by the trillions have been replaced by mistrust in spades. Vagaries have replaced verities, not only in the marketplace but in politics as well. Ironic, then, that buzzword of 2008 was "change". We are getting far more than we expected and bargained for. On the cusp of a new year, it is therefore tempting to follow the example of the Iraqi journalist Muntazer al Zaidi and hurl a shoe at the old one and shout: "Enough already!" The hitch is that 2009 could be worse, as money problems sweep the globe. No one - not even "change agent" Barack Obama and his celebrated Obi-Wan Kenobi calm - can be sanguine about that. firstname.lastname@example.org