We’re all supposed to be very grateful that the 30-first day of December marks the end of a year that was supposed so bad that it has people muttering in Latin. But was this really an annus horribilis?
First of all, let’s be clear about what we’re talking about. Annus horribilis is just Latin for “horrible year” and has nothing to do with that other thing you were thinking about.
What made 2008 a horrible year? Well, the loss of millions of jobs, huge government interventions into the markets and the collapse of Bear Stearns, Lehman Brothers, Merill Lynch, AIG, Fannie Mae, Freddie Mac and dozens of banks certainly go on the list. The destruction of a decade’s worth of growth in the equities markets and the foreclosures on mortgaged homes across America should get inked onto the list too.
But we can squint up our eyes a bit and see that 2008 may have been the best year in quite a long time. We finally emerged from a low, dishonest decade of housing inflation and subsequent malinvestment. Wealth we imagined we had proved to be illusory, and huge investments once thought to be profitable turned out to be loss makers. Many businesses that could have been started or grown went unborn or stagnated while money flowed into real estate and debt markets.
That sounds bad, but it’s not really. It’s sort of like getting diagnosed with a serious heart condition: it’s a mistake to blame the diagnosis or beat up the doctor. In 2008, we finally got our diagnosis, started to became a reality based community once again. That diagnosis is the first step in getting well.
So let’s not go into New Year’s Eve with a frown and a look of worry. We’ve finally put an end to the madness that afflicted our markets in 2008. That, friends, is something we can celebrate.
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