Everyone wants a neat explanation of the panic that destroyed the economy and put the government in charge of Wall Street. Good luck with that! Here's a look back on the year money forgot.
Panic, by its nature, is an unreasonable fear that seizes one suddenly. But it comes after a series of shocks that drain confidence and stoke worries. Such was the Panic of '08: a torrent of news, bad turning to worse, which by its very ceaselessness made the hardiest souls cringe.
One can point fingers, document the bonus-driven greed of bankers, explain the overly complex financial vehicles which spun out of control. But trying to explain it all away misses the point — that sheer chaos overtook the world of money.
Treasury Secretary Hank Paulson, in an effort to bolster the stock price of mortgage lenders Fannie Mae and Freddie Mac, gives their debt an explicit guarantee. His move backfired: Shareholders, seeing the prospect of a government takeover which would wipe them out, sell their shares.
AIG, which had guaranteed billions of dollars in financial contracts linked to subprime mortgages, teeters on the verge of bankruptcy before getting an $85 billion infusion from the government.
Banks stop lending to each other. Stocks plunge. Even the price of oil drops below $100 a barrel. Washington Mutual is seized by regulators and sold to JPMorgan Chase.
Congress passes a $700 billion rescue plan. Stocks continue to drop as economic figures show the economy was faltering even before Wall Street's collapse. Ferrari-loving ex-Goldman Sachs banker Neel Kashkari is hired to oversee it. The former rocket scientist rapidly proves too geeky for the job. The Dow falls below 10,000, then 9,000. Citigroup tries to buy Wachovia and fails; Wells Fargo buys Wachovia instead.
Layoff fears hit Silicon Valley: Partners at Sequoia Capital, the venture-capital firm which backed Apple, Google, Cisco, and Yahoo, among others, urge their companies to cut costs quickly. Dozens follow suit in pink-slipping employees.
Government bailout genius Neel Kashkari appears to be stress eating.
Citigroup stock drops 60 percent in a week, prompting the government to invest $20 billion and guarantee a $306 billion portfolio of securities against losses.
On Black Friday, a group of shoppers break into a Wal-Mart before it opens and trample a worker. Holiday sales prove dismal.
Post-Thanksgiving layoffs sweep the New York media. Yahoo throws a series of holiday parties, and then lays off 1,500 employees. Bank of America CEO Ken Lewis suggests only idiots actually lend people money. Everyone resolves to pretty much give up until Barack Obama's inauguration.