A lot of amazing events have occurred over the past decade. From the Indian Ocean tsunami having a disastrous effect on thousands of people to the powerhouse YouTube.com first getting its start, the years 2000 to 2009 offered plenty to talk about by the water cooler.
But what about the biggest finance events of the decade? There are plenty to recount. So let’s take some time to explore the most memorable events that occurred with a decade-long financial review.
2000: Dot-Com Bubble Peaks, NASDAQ Reaches All-Time High
Though the Internet had been formerly introduced to the masses as the World Wide Web in 1995, it wasn’t until the year 2000 where people – and businesses – really saw its value.
After surviving the Y2K drama at the turn of the year/decade/century/millennium, many focused their attention on the possibilities of online store profits. As a result, Internet stocks jumped higher and higher by the day creating an intense dot-com bubble (which would eventually burst).
At the same time, the NASDAQ reached an all-time high of 5,048. This occurred on March 10 and was synonymous with the dot-com peak.
2001: Terrorist Attacks, New York Stock Exchange Closed
The year 2001 will go down in history as one of the most memorable years of a lifetime.
Along with a new fear of terrorism that several generations had not experienced, there was also a halt to the stock exchange. Initially, the New York Stock Exchange was delayed after the first plane hit the World Trade Center. But after the second plane hit, the NYSE closed down completely.
Even more staggering was that it remained closed for six days. This was only the third time in history that it would have been closed for such a long period of time. When it did reopen, the Dow Jones Industrial average had dropped by a whopping 648.81 points.
2002: Enron, Corporate Scandals, Dot-Com Bubble Bursts
While Enron scandal actually got its start in December 2001, when the company originally filed Chapter 11 bankruptcy, it wouldn’t be until 2002 that the scandal truly erupted. The U.S. Department of Justice pursued a criminal investigation that revealed irregular accounting practices. Unfortunately, the practices were discovered too late. Many employees – now with no jobs – were forced to not only lose their company stock, but also their retirement plans.
In addition to the Enron scandal, Tyco and WorldCom also found themselves in the hot seat. And the dot-com bubble finally had burst, helping to push the Dow Jones below 7,200.
2003: Iraq War Begins – Taxpayers Billed, More Scandals
After the attacks on the World Trade Center buildings and the Pentagon, President George Bush declared his war on terror, which would begin in Iraq in March 2003. As a result of the war, billions in tax dollars would be spent to fund it.
In the same year, another corporate scandal emerged, this time from the well-loved woman of many talents, Martha Stewart. After being the subject of investigation for insider trading, she ended up being convicted of her crime and spending time in jail.
2004: Charitable Contributions Increase, Google Goes Public
Another big year in finance was 2004, but not for scandals or wars. Instead, it was a big year in charitable donations as a result of the tsunami that hit nations bordering the Indian Ocean. The tsunami killed approximately 230,000. But the good that came out of it were the donations from around the world that totaled more than $7 billion.
In August of the same year, Google went public. With stock originally priced at $85 per share, it would increase significantly, reaching $600 by Dec. 2009.
2005: Hurricane Katrina Hit, Price of Gas Skyrockets
It wasn’t until 2005 that the masses would start reminiscing about the gas prices of yester-year. Unfortunately, after Hurricane Katrina, the oil reserves seemed to have diminished and thus, gas prices skyrocketed. But that’s not all that was affected by the hurricane.
About 400,000 jobs were also lost during this natural disaster, along with entire neighborhoods and thousands of lives.
2006: Home Values Peaked
As we know, two years away was a major housing crisis, but in 2006, home values peaked. This was great news for house flippers look for major profits. From the years 2000 to 2006, home prices rose at an average annualized rate of 8.2 percent about inflation.
Of course, with the financial crisis hitting a few years later, we discovered that many of the home values peaked because lenders were increasing neighborhood values by giving out subprime mortgages to borrowers who couldn’t afford it. In other words, the housing bubble was setting itself up for a pin burst soon enough.
2007: Dow Jones Average Peaks, Recession and Signs of Impending Housing Crisis Emerge
We had an interesting mix of sweet and sour in 2007. On one hand, we had the Dow Jones Industrial average hit its highest close ever on October 9, 14,164.43. Things were looking up for those investing their finances. However, in the same year, Countrywide Financial began sending out warnings that subprime borrowers who had been dished out ARM mortgage loans were having problems repaying them.
After word of the news, investment banks began writing off millions in investments that were backed by these risky mortgages. Interestingly enough, these early signs of the global financial crisis were marked by the official start of the recession in December (though it was not declared as such until 2008).
2008: Financial Crisis, Recession Takes World by Storm
When doing a financial review, there’s no way that you can overlook 2008, the year of the financial crisis. It all started in March when Bear Stearns was sold to JPMorgan Chase for $2 a share. This represented the demise of the fifth-largest Wall Street investment bank. Next, we saw IndyMac Bank fail at a cost of $10.7 billion to the FDIC. These two banks represented only 25 of the banks that would fail that year.
Next, gas prices skyrocketed to points nearly as high as those seen after Hurricane Katrina. With oil reaching $150 a barrel, gasoline by the gallon jumped to an average of $4.11 nationwide.
Then the big one occurred. On Sept. 15, the mortgage crisis forces Lehman Brothers to go under. After this occurred, a significant chain of events followed from stocks dropping the farthest ever – 777.68 points – to banks refusing to lend and others going bankrupt (prompting the $700 billion financial bailout and an FDIC insurance increase for bank deposits to $250,000).
The worst part? Millions of people lost their jobs from 2008 into 2009 and those who kept them found that with the stock market crash they’d lost thousands in their 401k retirement plans.
Oh, and as an honorable mention, revolving debt by U.S. consumers reached an unprecedented $988.2 billion.
2009: A Nation (and World) Try to Recover
After a full year of job losses in the millions, foreclosures leading to millions without homes and record numbers needing government assistance to survive, 2009 was a year of recovery – or at least honest attempts at it. In February, only one month after newly-elected President Barack Obama was inaugurated, he signed into law the $757 billion economic stimulus package.
The market was still struggling and saw major lows in March; however, it bounced back incredibly well, even jumping 60 percent over its lowest lows. Other good news of the year was that a new consumer bill was signed into law, the Credit CARD Act, which would protect consumers against unfair practices of credit card companies, such as raising interest rates and lowering limits without prior notice.
Also, in an effort to help move gas guzzlers off of the roads and simultaneously jump-start the economy, the government approved rebates on car purchases with what became known as “Cash for Clunkers.”
But the good news didn’t mean all was well across the board. In fact, employers continued to let their workers go by the thousands each month, resulting in the highest unemployment rate in 26 years of 10.2 percent.
Now that we’ve entered a new year, the possibilities are endless. And while some predictions have already been made about what we can expect, there major hope is that the last couple of years of the decade will not be repeated anywhere in the 2010s.
What financial events do you remember from the previous decade?
I can’t think of any to add, but I wanted to say that this article is helpful because its a great summary for people who want to know what’s going on/what’s happened, without having to page through the New York Times everyday! It’s like cliff notes! Thanks!