2008 draws to a close
December 28, 2008 by admin
One of the worst years in history for the economy is drawing to a close this week. There will be many lessons learned from the down turn with the nations and world economy this year. The year started with pressure from the housing market and continued to get worse. The government was slow to react to the foreclosure disaster that began to gain momentum in 2007 as subprime lenders started folding up.
This year saw two of the nations largest lenders Countrywide & Indymac bancorp end operations, the nations two largest agency lenders Fannie Mae & Freddie Mac forced into a government takeover, companies such as BearStearns & Lehman Bros forced out of business or into bankrupty. The stock market lost over 40% of it’s value and the job market contracted every month of the year. The economy began to steam roll down in mid September and Oil prices went from $150 per barrel to under $40 per barrel in a little over six months time. Auto manufactures were on the brink of bankruptcy, if not for a last minute bridge loan from the Whitehouse. The world soon realized that every economy is dependant upon growth and no countries are immune to economic slowdowns. The European central bank cut rates agressively and led the way in helping to stabalize the lending industry with a lifeline to the banking industry that was followed by the U.S. Treasury. The fed has cut the fed fund rate down to .25%, a historic low point, and one that has helped to bring mortgage rates down to historic low levels.
2008 will be remembered as one of the worst economic periods since the great depression and will have a tremendous influence on the world moving forward. The days of easy credit and bank lending have come to a dramatic end as lenders are closely scrutanizing every loan moving forward. Almost every consumer and worker will be glad to see the year end with hopes of a new administration and financial future in 2009.