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Shockwaves. Fear. Banks failing. Stunning stock market plunges. Massive firings. Lost pension funds. September 2008 should live in infamy but Republicans want us to forget where they led the country. Remember all that? Sure you do! Where would it all lead? How could we survive it all? How bad was it going to be? Would we lose the money in our bank accounts? Would I lose my job today or tomorrow? Would we EVER recover?

At his home... Edward Yardeni... investment strategist, received terse e-mail messages from clients and friends. “Is this the end of the world?” one asked. Another sent a simple plea: Stop the world, “I want to get off.”
And really, no one understood how and why it was happening, not even those on Wall Street. We just had a deep feeling of dread.

“It’s not overly dramatic to say that investors are panicking."
“President Obama took office in the midst of the worst recession since the Great Depression. The country had lost nearly 4 million jobs in the six months before he took office...
Losing 8% of our economy every month. (Rep. Van Hollen. D-MD, on msnbc today.) V-shaped trough jobs loss & then jobs gain with Obama.

If you've forgotten or were in a coma, if you've repressed the horrors of '08, or if you were simply uninformed, read on. If you remember, you're dismissed!

For Stocks, Worst Single-Day Drop in Two Decades

At 1:30 p.m. the House began to vote on the rescue package.... negotiated over the weekend. About 10 minutes later, when it became clear that the legislation was in trouble, the stock market went into a free fall, with the Dow plunging about 400 points in five minutes.

What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into Wall Street’s blackest day since the 1987 crash. The broad market, as measured by the Standard & Poor’s 500-stock index, plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average fell nearly 778 points, or 6.98 percent, to 10,365.45.

Across Wall Street, no one could quite believe what was happening on the floor — the floor of the House of Representatives, not the New York Exchange.

As lawmakers began to vote on a $700 billion rescue for financial institutions, the Voyageur Asset Management trading desk in Chicago went silent. Money managers gaped at a television screen carrying news that seemed unthinkable: the bill was not going to pass. Shortly after 1:30 p.m., the rescue was rejected.

“You just felt like the world was unraveling,” Ryan Larson, the firm’s senior equity trader, said. “People started to sell and they sold hard. It didn’t matter what you had — you sold."

Markets were consumed with the panic flooding the market. All investors, all who had pension funds invested on Wall Street were both frustrated and panicked. What could anyone do? We were told this was going to have a big impact on our economy. People said, hoard your money, don't spend it on anything.

The Federal Reserve acted aggressively in an effort to "jump-start the credit markets....

(The Fed) .... offered hundreds of billions of dollars in loans to banks around the world because banks and investors were unwilling to lend to each other. But neither the stock market nor the credit markets appeared to respond.

Just 24 hours earlier, few imagined Monday would play out this way. Treasury Secretary Henry M. Paulson Jr. and the House speaker, Nancy Pelosi, announced Sunday afternoon they had agreed on terms of a bailout.

Paul Krugman, a year later, offered analysis in this 9/2009 piece. Some highlights:
How Did Economists Get It So Wrong? PAUL KRUGMAN

U.S. households have seen $13 trillion in wealth evaporate. More than six million jobs have been lost, and the unemployment rate appears headed for its highest level since 1940.

By October of (2008), however, Greenspan was admitting that he was in a state of “shocked disbelief,” because “the whole intellectual edifice” had “collapsed.” Since this collapse of the intellectual edifice was also a collapse of real-world markets, the result was a severe recession — the worst, by many measures, since the Great Depression.

So by late 2008, with interest rates basically at what macroeconomists call the “zero lower bound” even as the recession continued to deepen, conventional monetary policy had lost all traction.

Fiscal stimulus is the Keynesian answer to the kind of depression-type economic situation we’re currently in.

That’s a much harder position to maintain now that the collapse of a vast bubble — a bubble correctly diagnosed by behavioral economists like Robert Shiller of Yale, who related it to past episodes of “irrational exuberance” — has brought the world economy to its knees.

Last year, everything came apart
.......There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year.

...fourth quarter of 2008, right after the Lehman failure, now shows an 8.9% annual rate of decline in GDP (previously 6.8%), and now represents the worst single-quarter decline in GDP since the 10.4% drop in the first quarter of 1958, exceeding the 7.9% decline in the second quarter of 1980
Remember how the collapse effected our cities and states who had invested badly?
Calamity that’s upending the finances of U.S. states and cities.

For more than a decade, banks and insurance companies convinced governments and nonprofits that financial engineering would lower interest rates on bonds sold for public projects such as roads, bridges and schools.

That failed promise has cost more than $4 billion, according to data compiled by Bloomberg, as hundreds of borrowers from the Bay Area Toll Authority in Oakland, California, to Cornell University in Ithaca, New York, quietly paid Wall Street to end agreements since 2008.

California’s water resources department this year spent $305 million unwinding interest-rate bets that backfired, handing over the money to banks led by New York-based Morgan Stanley. North Carolina paid $59.8 million in August, enough to cover the annual salaries of about 1,400 full-time state employees.

.......“It was brilliant, and it all blew up on me,” said Brian Mayhew, chief financial officer of the Bay Area Toll Authority, the state agency that gave Ambac Financial Group Inc.... (NY bond insurer) that filed for bankruptcy this week, $105 million to end $1.1 billion of interest-rate agreements.

Even Wall Street Journal articles talked about how the recovery would be slow, a real "slog."
Wall Street Journal
Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. And a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill.

So any recovery was destined to be a slog.

"A housing collapse is very different from a stock market bubble and crash," says Nobel Prize-winning economist Peter Diamond of the Massachusetts Institute of Technology. "It affects so many people. It only corrects very slowly."

Diary  of  MELTDOWN:  For the severely forgetful, Mitt, Paul, that's you!

Financial events in September 2008 chronicles meltdown, shows ups and downs on market. Part of it:

Financial Meltdown:  An unprecedented upheaval in financial markets led to one of the most tumultuous times in Wall Street's 216-year history. Here is a brief synopsis of major events in the meltdown.

Sept. 7, 2008 Officials seize both Fannie Mae and Freddie Mac, temporarily putting them in a government conservatorship, replacing their chief executives and taking a government financial stake in the companies.

Sept. 8-9, 2008 Shares of Lehman Brothers plunge 52 percent amid worries the investment bank is struggling to find new investors and raise capital.....

Sept. 10, 2008 Lehman Brothers says it lost $3.9 billion in its fiscal third quarter and plans a number of moves to shore up its balance sheet. The firm says it will consider all "strategic alternatives," a Wall Street synonym for seeking a buyer.

Sept. 14, 2008 After a weekend of furious negotiations, U.S. regulators make it clear there will be no government bailout of Lehman Brothers. Fearful of the likely fallout from a Lehman failure, Merrill Lynch & Co. arranges a hasty deal to be bought by Bank of America Corp. for $50 billion in stock.

Sept. 15, 2008 Lehman Brothers is forced to declare bankruptcy, the largest ever in the U.S. Investor concerns quickly turn to American International Group Inc., the nation's largest insurer, as downgrades to its debt by all three credit ratings agencies lead to a plunge in its stock price. Dow -499

 Sept. 16, 2008 Government announces an $85 billion emergency loan to rescue AIG, saying a failure of the insurer could have sent shock waves throughout global markets..... A massive pullout from Reserve Primary Fund, a $62 billion money market fund, causes its holdings to fall below its total deposits. Money market funds are typically considered to be almost as safe as cash.

 Sept. 17, 2008 A major investor in ailing Washington Mutual Inc. removes a potential obstacle to a sale of the thrift. Morgan Stanley and Wachovia Corp. are said to be in talks about a possible combination. Dow -447

Sept. 18, 2008 The Fed and several other central banks inject as much as $180 billion into money markets. The Fed also added another $55 billion in overnight loans. Putnam Investments closes a $15 billion money market fund after institutional clients pull their cash.Dow +411

Sept. 19, 2008.... The Treasury Dept. says it will tap into a Depression-era fund to provide guarantees for money market funds. SEC enacts temporary ban on the short-selling of nearly 800 financial stocks.

 Sept. 22, 2008 Congressional leaders and the Bush administration haggle over details of the massive $700 billion financial bailout legislation. Main stumbling blocks are executive compensation, government purchase of equity in faltering companies...... allowing judges to rewrite bankrupt homeowners' mortgages so they could avoid foreclosure. Dow -379

Sept. 25, 2008 Federal Deposit Insurance Corp. seized Seattle-based Washington Mutual Inc., one of the country's biggest banks, and sold banking assets to JPMorgan. Since credit crisis started, WaMu has been hurt by a sharp rise in defaults in its mortgage portfolio. It is the largest bank ever to fail in the nation's history.

Sept. 29, 2008 The House defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and congressional leaders from both sides of the aisle... Stocks plummeted on Wall Street even before 228-205 vote to reject the bill.... Dow -778

Sept. 30, 2008 Congressional leaders scrambled to come up with changes to help them sell the failed $700 billion U.S. financial rescue plan to rank-and-file members.... Meanwhile, President Bush made another statement at the White House. "Congress must act," he said.

Oct. 3, 2008 The House voted 263-171 to send the Senate-passed version of an unprecedented $700 billion government bailout of the battered financial industry to President Bush, which the president promptly signed into law. Dow -157

Oct. 6, 2008 Wall Street suffered through another extraordinary and traumatic session with the Dow Jones industrials plunging as much as 800 points — their largest one-day point drop — before recovering to close with a loss of 370. The catalyst for the selling, which also took the Dow below 10,000 for the first time in four years, was investors' growing despair that the spreading credit crisis will take a heavy toll around the world. Dow -370

Oct. 7, 2008 Stocks continued to plunge after Federal Reserve chairman Ben Bernanke warned that the financial crisis will make the current economic downturn last even longer. In a speech to the National Association of Business Economics, Bernanke said "the outlook for economic growth has worsened." He says the financial turmoil is adding to how long we will see a period of a weakened economy and an increased "risk to economic growth." Dow -508

Oct. 8, 2008 The Federal Reserve, joined by other central banks, cut benchmark interest rates. Treasury Secretary Henry Paulson says global financial markets remain severely strained and that even with the implementation of the government's $700 billion rescue program to buy bad assets from financial
institutions, some banks will fail. He also called for patience saying "the turmoil will not end quickly and significant challenges remain ahead."
Dow -191

Oct. 9, 2008 Citigroup walks away from its attempt to buy Wachovia, handing victory to Wells Fargo. The Dow Jones falls below 9,000 for the first time in five years and briefly dips below 8,000. Dow -682

Oct. 12, 2008 European leaders agree to guarantee bank borrowing and use government money to prevent big lenders from going under, hoping to stave off a recession.

Oct. 13, 2008 The Fed leads unprecedented push by central banks to flood the financial system with as many dollars as banks want, helping to reduce money-market rates. ....Wall Street storms back after its worst week ever, staging the biggest single-day stock rally since the Great Depression. Dow +936

Oct. 15, 2008 Despair over the economy sent Wall Street plunging again, propelling the Dow Jones industrials down to their second-largest point loss ever. Stocks fell on a combination of disheartening economic data, including a big drop in retail sales and a Federal Reserve report that said tight credit conditions are hurting businesses across the country. Dow -733

Oct. 23, 2008 Wall Street retreated again as fears about the health of the economy scared off bargain hunters ..... The buying that had come in spurts disappeared as investors fretted that the economy is either in a recession or headed for one despite government relief efforts.... Two days of selling that sliced nearly 750 points off the Dow... Dow -203

Oct. 31, 2008 The stock market closed out a horrendous October, its worst month in 21 years, with a big advance as more investors took chances on stocks turned into bargains by waves of intense selling. Dow +144

Nov. 25, 2008 Plans announced for the economy in a further effort to stabilize the financial system.

And this:
Why The U.S. Remains In Recession Oct 30th, 2009
Oct 30th, 2009
As if on cue, the Dow Jones index soared to the skies in sequence with the Commerce Department’s triumphant announcement that the third quarter GDP growth in the United States was a robust  3.5 %. After 4 consecutive quarters of economic contraction, the pronouncement that the American economy was now growing, and at a stronger rate than many experts had forecasted, the cheerleaders on Wall Street are celebrating the end of the recession. Hallelujah, the Great Recession is over, the stimulus package has worked!

Not so fast.

Let us journey back into recent history of just over one year ago.It is August 28, 2008 and the Commerce Department has just released its revised growth figures for the second quarter of 2008. It turned out, according to the statisticians at  the Commerce Department, that the American economy grew at a much faster pace than originally reported. The revised Q2 GDP growth figure for 2008 was 3.3%, nearly identical with the Q3 figures now being reported in 2009. The pundits rejoiced at this magnificent economic news, proclaiming that these numbers reflected the success of the $150 billion deficit-driven  stimulus package approved by Congress at the beginning of the year. Analysts proclaimed that the impressive growth figures for Q2 of 2008 meant that the U.S. economy had dodged a bullet, and thanks to loose fiscal and monetary measures, there would be no recession.

Two weeks after the release of the revised and supremely optimistic quarterly growth figures by the Commerce Department, Lehman Brothers went bankrupt, the global financial system went into cardiac arrest and a synchronized recession struck virtually every economy on the face of the earth.


We were probably all thinking that anyone taking on the presidency in January 2009 was going to have a very very hard time succeeding. Impossible re-set of economy. I almost wished a Republican would win because I didn't think anyone had a chance to pull it all out in four years, the president does not control the world! He'd be blamed. But more than that I wanted, we wanted, the most competent, best values guy to win, we wanted Barack Obama as president, keeping our country safe.

Remember how George Bush met with the G-20 in mid-November 2008? They, too, were panicked, wanting to reassure markets and their populations, knew they were in deep trouble and took extreme measures. Fiscal, monetary and regulation changes were discussed for stabilization of markets.

And Mitt Romney and Paul Ryan, Republicans, want to blame President Obama for not having gotten everything back on track after all that? They want to blame him for the whole collapse it seems!

Note: All words in bold are by diarist.


Mitt and Ryan

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Comment Preferences

  •  Yay, Michelle and Julian! (11+ / 0-)

    What a great opening convention night for the Democrats!

    Do we rock or what? That's what truth looks like, GOP!

    "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

    by Gorette on Wed Sep 05, 2012 at 07:06:41 AM PDT

  •  Excellent post (5+ / 0-)
    Recommended by:
    MBNYC, eXtina, Gorette, Heavy Mettle, efrenzy

    A few people in my own circle are delusional.  They CLEARLY are better off in many ways (one just got a promotion and raise, another just bought a new house, etc), and yet they insist they are not better off than they were 4 years ago.

    I wish people who actually are better off and insist that they're not would automatically get half their retirement fund confiscated and be among 800,000 people losing their jobs every month.  If you miss the good ole days of 2008, it's only fair that you should get a chance to re-experience it.  

    •  Right. I wish they'd replay news (1+ / 0-)
      Recommended by:

      and talk shows from Sept-Oct. 2008 to remind people of the mentality then!

      "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

      by Gorette on Wed Sep 05, 2012 at 07:23:05 AM PDT

      [ Parent ]

  •  Yep, short memories (4+ / 0-)
    Recommended by:
    cheerio2, MBNYC, Gorette, Heavy Mettle

    how do you remind people how close they were to the abyss?

    Think Progress suggests we revisit headlines from 4 years ago (when Bush was President!!!! Sep 08) to remember just how dreadful it was

    STOCK SHOCK FELT ROUND THE WORLD. Gets ‘nasty’ as Lehman tanks, Merrill vanishes, AIG wobbles [New York Daily News, September 16, 2008]

    Depression Coming?
    Boil Some Beans; Ladies Who Quilt Give Tips On Surviving Tough Times [Albuquerque Journal, September 21, 2008]

    One day on the brink On Wednesday, it seemed U.S. economy might collapse [St. Louis Post-Dispatch, September 21, 2008]'

    ‘Great Depression’ closer than U.S. admits,
    report finds [Pittsburgh Tribune-Review, September 27, 2008]
    Will Bush become the new Hoover? [Politico, September 19, 2008]'

    Developers bend under housing meltdown
    [Colorado Springs Gazette, September 27, 2008]

    Depression seen possible [Florida News-Press, September 27, 2008]

    Wall Street Meltdown Continues [CNN, September 17, 2008]

    Is It Really the Next ‘Great Depression’? [NPR, September 19, 2008]

    Behind Closed Doors, Warnings of Calamity [The New York Times, September 20, 2008]

    "I'm sculpting now. Landscapes mostly." ~ Yogi Bear

    by eXtina on Wed Sep 05, 2012 at 07:17:44 AM PDT

  •  This. (3+ / 0-)
    Recommended by:
    Gorette, Heavy Mettle, cheerio2

    If Romney/Ryan get in, God forbid, the 2008 crash will look like a pool party on one of Mitt's estates.

    Fuck me, it's a leprechaun.

    by MBNYC on Wed Sep 05, 2012 at 07:20:43 AM PDT

  •  Just had this conversation with my office-mate (5+ / 0-)
    Recommended by:
    Heavy Mettle, cheerio2, Gorette, MBNYC, efrenzy

    and we're in the financial industry!  The denial needs to be pounded on over and over again.  Am I better off?  You bet your ass.  My whole industry was on the verge of collapsing.  It made '87, '04, hell '73 seem like a cakewalk.

    Ancora Impara--Michelangelo

    by aravir on Wed Sep 05, 2012 at 07:25:21 AM PDT

    •  "My whole (financial) industry was on the verge (2+ / 0-)
      Recommended by:
      MBNYC, aravir

      of collapsing."

      That's why I wrote this. I was getting the feeling no one was going to talk about it, but today I heard some push-back on tv, finally!

      Thank you for your comment, aravir.

      "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

      by Gorette on Wed Sep 05, 2012 at 07:56:11 AM PDT

      [ Parent ]

  •  Great diary, people need reminding! tx eom (3+ / 0-)
    Recommended by:
    cheerio2, Gorette, MBNYC
    •  Thank you, Mettle! Just a friendly reminder.... (0+ / 0-)

      to those with that retroactive disease. Well, forget the friendly part actually.

      "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

      by Gorette on Wed Sep 05, 2012 at 07:57:33 AM PDT

      [ Parent ]

  •  things were so bad in the fall of 2008 (3+ / 0-)
    Recommended by:
    Gorette, Inland, efrenzy

    because of irresponsible deregulation, casino style investments, two wars and tax cuts not paid for, that the world economy collapsed.  So frightening was this collapse that the Republican candidate for President suspended his campaign to fly to Washington for top level meetings with the Republican President responsible for much of the mess where the candidate didn't speak.

    We therefore elected the candidate who didn't panic, didn't suspend his campaign,  and who asserted that a president had to be able to do more than one thing at a time as there would always be multiple crises.  

    The net result is that the economy is not collapsing and despite Republican efforts to block every single jobs plan, unemployment benefits, and general obstruction that led to the first down grade of the US credit rating explicitly blamed on the Republicans in Congress, is actually growing and has produced more jobs the eight years of the incompetent Republican President who helped cause the economic collapse.  Further, the President helped broker a deal that saved the US auto industry that had record sales this past month, pulled combat troops out of Iraq, has a timetable to pull combat troops out of Afghanistan, ended DADT, supports women's right to choose health care options for themselves (and have basic birth control part of the standard formulary of drugs covered by insurance), supports marriage equality, and passed the first comprehensive health reform bill, a dream of Presidents for 100 years, starting with Republican Teddy Roosevelt.

    So economy not in freefall, not losing 800 thousand jobs a month,  more social equality, yeah, much better off.

    And the choice, between going back to the Republican policies that led to the great collapse of 2008 or going forward with economic growth and social justice?  Not really much of a choice.  The question isn't whether the country is better off than four years ago.  The question is, do you really want to go back to the way it was four years ago?  

    Do you really want to wake up every morning, expecting the news to be worse than the day before?  And then, finding out it always was?

    •  Excellent comment. "Economy is not collapsing," (1+ / 0-)
      Recommended by:

      yes, simple little things like that. Good summary.

      Good question: "Do you want to go back to the way it was four years ago?"

      I do remember McCain not going to that meeting or offering anything of substance whereas Senator Barack Obama actually did put himself on the line!.

      "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

      by Gorette on Wed Sep 05, 2012 at 08:02:49 AM PDT

      [ Parent ]

  •  Maybe Eastwood was mistaken (1+ / 0-)
    Recommended by:

    That was invisible Bush in the chair not invisible Obama.

    Some people have short memories

    by lenzy1000 on Wed Sep 05, 2012 at 07:48:50 AM PDT

    •  I like it and it's true, "invisible Bush." (0+ / 0-)

      But we remember how atrocious he was as president. Even his brother does: "I love my brother, but..................." heh. I loved that.

      "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

      by Gorette on Wed Sep 05, 2012 at 08:04:25 AM PDT

      [ Parent ]

  •  It's insane. Everyone was scared shitless on a (1+ / 0-)
    Recommended by:

    personal level, a national level and global level.  Now someone can't answer, "are you better off than four years ago", when four years ago was just the point real estate fell off the cliff and our financial system seized up?  Come on.

    "My taxes are of the legally correct height, and the core reason for my campaign is to make them a different, lower height, and it is none of your business what precisely either of those heights might be." Mitt, as channelled by Hunter.

    by Inland on Wed Sep 05, 2012 at 08:00:28 AM PDT

    •  That ^^ .... and (0+ / 0-)

      love your Hunter quote there.

      He, Meteor Blades and Gooserock are my three favs here, and kos of course.

      Yes, off the cliff, another of the terms that were heard then--- not now.

      "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

      by Gorette on Wed Sep 05, 2012 at 08:08:21 AM PDT

      [ Parent ]

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