2008 Lookback: Surprise, Surprise

2. Bernard Madoff. It was already December, and investors had been ground down by the sagas of Bear Stearns, Lehman Brothers, the GSEs, the mortgage market implosion, and AIG. And then this came to light, and took with it the last remnants of trust anyone had in Wall Street. An investing generation reared on the expectation of steady-to-great returns is giving way to one that will elect to squirrel money away elsewhere.

5. Alan Greenspan’s mea culpa: The ardent student of the philosophy of self-regulation and the magical ability of markets to protect the interests of parties involved basically said “My bad” in testimony in October. Saying that he’d found a “flaw” in his ideology, he commented that “those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity (myself especially) are in a state of shocked disbelief.” Paul Kasriel, chief U.S. economist at Northern Trust, said that “The irony is that here is an individual who did, and presumably still does, espouse the sanctity of free markets and because of his primary sin of commission, we are likely to get the biggest increase in financial-market regulations since the 1930s.”

8. Housing Indicators: The NAHB/Wells Fargo index of homebuilder confidence, which peaked in 1998-1999 with readings above 80, plunged to an all-time low of 9 (yes, 9) at the end of the year. The National Association of Realtors shows sales of existing homes down nearly 11% on a seasonally adjusted annual rate, and more than 11 months of housing supply is sitting on the market, even as builders make drastic reductions to their activities.

http://blogs.wsj.com/marketbeat/2008/12/29/2008-lookback-surprise-surprise/