Unexpected twists make 2008 an epochal year
The financial crisis, war on two fronts, and, above all, the US election make 2008 historic.
Here's the way the world looked last January: Hillary Rodham Clinton was a lock to win the Democratic nomination for president, and probably the election, too. The economy wasn't great, but it wasn't awful, either – many experts thought we'd avoid global recession. Meanwhile, Iraq seemed a lost case five years after the US invasion. And the price of gas? Hoo boy. It had passed $3 a gallon and was galloping upward, no limit in sight.Skip to next paragraph
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A lot has happened in the intervening months, hasn't it? If nothing else, 2008 showed that conventional wisdom isn't always terribly wise.
A year that promised to be merely important turned out to be epochal, as the US elected its first African-American president, and developed nations plunged into a frightening financial crisis, causing China and other emerging powers to question the verities of US-style capitalism itself.
Above all, the year saw the reemergence of state power, as governments from Tokyo to Washington pumped huge amounts of taxpayer cash into national firms. Laissez-faire probably isn't finished, as French President Nicolas Sarkozy claimed. But as they feel their way toward the post-slump era, world leaders may have a new regard for the limits of economic ideology, and for the dangers, as well as the benefits, of global trade and financial flows.
"Fate presents an opportunity wrapped in a necessity: to modernize multilateralism and markets. We must seize it," said World Bank President Robert Zoellick in an address to his Board of Governors this fall.
Perhaps the fraud revealed at the beginning of the year should have been a tip-off. On Jan. 19, the French bank Société Générale discovered and began unraveling a series of what it later called "massive fraudulent directional positions." A week later, French police arrested a junior trader named Jerome Kerviel and charged him with losing $7 billion via unauthorized financial activity.
The lost sum was larger than the bank's total market capitalization, and at the time the biggest such fraud in history. By the end of the year, however, it was easily topped, as US financier Bernard Madoff was arrested Dec. 11 and charged with running a $50 billion Ponzi scheme, a swindle in which early investors are paid off with money from later ones.