Tales of the City 2009

That was the year that, well, wasn't the start of another Great Depression...Sean O'Grady looks back at some stories that resembled the plot of a novel


1. The Power and the Glory


The power was with governments. Only they – and the taxpayers behind them – could meet the bill for preventing a re-run of the Great Depression: $10trillion (that is, $10,000,000,000,000) in support and guarantees to the financial system and the wider economy.

For this we have to thank the leadership offered by Gordon Brown and Mervyn King, Governor of the Bank of England, in the G20 forum in London in the spring, and again in Pittsburgh this autumn. President Barack Obama also seemed to "get it". However, most of the glory redounded on Ben Bernanke, the chairman of the US Federal Reserve. Mr Bernanke's previously recherché academic expertise on the Great Depression came in handy. He was Time magazine's Person of the Year: "In terms of influence and how the economy went this year, Bernanke was the guy."

The Bank of England cut rates to 0.5 per cent and launched what is now a £200bn programme of "quantitative easing" – injecting money into the economy. Even that could not prevent the UK having its worst year economically since 1921.

Still, stock markets are up about 50 per cent on their panicky lows in March: Lloyds managed to pull off the biggest rights issue in history – £13.5bn. That would have seemed fanciful a year ago.

2. Chocolat

There is nothing quite so Schadenfreude as a patriotically charged takeover battle. Another sign of the renewed strength of capital markets was the resurgence in merger and acquisition activity from its 40-year low. By far the most high-profile was Kraft's bid for Cadbury. One newspaper launched a "Keep Cadbury British" campaign, though Peter Mandelson, the Business Secretary, for whom 2009 was an annus mirabilis, admitted that there wasn't much he could do about it in any case. About as much use as a chocolate fireguard, you might say.

3. King Solomon's Mines

Elephantine as they are, the world's mining giants just seem to want to get bigger – though with the right people. Rio Tinto ditched its proposed deal with Chinalco as soon as equity and commodity markets picked up – greatly to the irritation of the Chinese, who have since been arresting senior Rio executives for "spying". A much rumoured tie-up between Anglo-American and Xstrata came to nought, but Rio and BHP deepened their relationship. Gold drove things along nicely, hitting all time highs of over $1,100; oil doubled to around $77 a barrel.

4. Paradise Lost

When Dubai World, 100 per cent owned by the Dubai government, asked for a delay on its latest debt repayment on the eve of the Eid holiday, the world suddenly woke up to the possibility that sovereign debt, or quasi sovereign debt, might be "the new subprime". Cue panic in government bond markets. Credit downgrades for Greece, Ireland and Spain underlined the problem, and there were even grumblings from the credit agencies about the UK's soaring deficits (£178bn in 2009) and the lack of any clear plan to cut the borrowing. Paradise for investors was Brazil's stock market, where the Bovespa index soared by more than 140 per cent. Next comes Russia's RTS, with a jump of 129 per cent and Jakarta's on 115 per cent.

5. The Light That Failed

Faith in market economics faltered last year: Even Lord Turner, the head of the Financial Services Authority and far from a firebrand socialist, said that some things the banks did were "socially useless". Apart from the noisy bankruptcy of the financial sector, nowhere was this ideological denouement more dramatic than in the privatised utilities: Once derided as state-owned disasters, last year saw some turn into privately-owned disasters.

National Express' east coast mainline train franchise was re-nationalised, while British Airways seems to be far from the world's favourite airline nowadays, even though the Unite union's inability to run a strike ballot allowed BA to escape its "twelve days of chaos" industrial action. Tube Lines also ran into financial problems, and looked to the taxpayer for a £1.4bn rescue. The Channel Tunnel trains debacle at Christmas rounded off a stressful year for the travelling public.

6. Persuasion

The Governor of the Bank of England raised his eyebrows, and the politicians raised voices, but only the Chancellor Alistair Darling's "super tax" on bankers' bonuses seems to have much chance of persuading bank boards to restrain the extra they pay their staff. Hubris seems unbounded. Stephen Hester, the man who replaced "Fred the Shred" at the Royal Bank of Scotland, complained that the banks had been "politicised". Lloyd Blankfein, Goldman Sachs' chief executive, became infamous for claiming "we are doing God's work". Their bonus pot is rumoured to be £14bn: Small wonder Rolling Stone magazine called Goldmans "a great vampire squid wrapped around the face of humanity". More soberly, Mervyn King remarked in October, "never in the field of human endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform."

7. Crime and Punishment

Bernie Madoff was sentenced to 130 years for creating a $65bn Ponzi scheme, shares a prison cell with a 21-year-old drug user and reports state he "eats pizza cooked by an inmate convicted of child molestation". Sir Allen Stanford, Texan billionaire and cricket tycoon was arrested for allegedly defrauding investors out of $8bn through a bank in Antigua. Others roam free.

There was loss of life during the G20 summit riots in the City, in the spring, but the public otherwise refused to stage a wider revolt against capitalism, leaving it to the courts, Parliament and the regulators to administer justice.

8. Metamorphosis

The world's car industry convulsed during the year, and emerged leaner and fitter. Two of America's big three – Chrysler and GM – went into Chapter 11 and emerged the other side owned by Fiat and the US Treasury respectively, shorn of expensive debts and pensions claims. Once unassailable, Toyota's boss said the world's number one carmaker could be nearing the brink of "capitulation to irrelevance or death", "grasping for salvation". It recorded its first loss since 1950; Tata of India launched the Nano, the world's cheapest car (£1,300) and declared record profits. The Korean Hyundai-Kia group is now a serious global force. Volkswagen's purchase of Porsche and a strategic stake in Suzuki signaled both its renaissance and ambitions. Most surprisingly perhaps, Vauxhall/Opel and Jaguar Land Rover both survived a near death experiences: the UK industry is back from the brink, again.

9. The Way We Live Now

Are you on Facebook? Lots of businesses are. Social networking, gaming and mobile phone technologies grew closer together, thanks to the Apple iPhone and its thousands of "apps". Escapism was big: 2009 was the biggest year for box office takings ever, and the game Call of Duty: Modern Warfare II, from Infinity Ward, set the record as the most successful entertainment industry release in history.

Other signs of more digital times and web-domination were the demise of Kodachrome film and Microsoft's Encarta. The BBC's Project Canvas promised to further blur the distinctions between the web and TV. Rupert Murdoch and son James wondered aloud about how to make Google pay for newspaper content. Their spin doctors dubbed Google a "tapeworm".

10. Gone With The Wind

Creative destruction is what recessions are supposed to be all about. So, goodbye to Saab, Pontiac, Saturn, LDV Vans, Threshers, Borders, Fly Globespan, Setanta and the London Lite and londonpaper freesheets. The Britannia, Dunfermline, and Chelsea building societies lost their independence; Banco Santander said Abbey, Bradford and Bingley and Alliance & Leicester brands will soon disappear. Formula 1, dented by withdrawals by the likes of Honda and BMW looks short of fuel.

Farewell, too, to Bruce Wasserstein, king of the 1980s M&A boom, and Paul Samuelson, author of the best selling textbook Economics. As stock markets point to a brighter future, it is tempting to recall Samuelson's famous joke: "To prove that Wall Street is an early omen of movements still to come in GNP, commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions. And its mistakes were beauties."

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Life and Style
tech

Apple has been hit by complaints about the 1.1GB download

Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
A 'Sir Alex Feguson' tattoo
football

PROMOTED VIDEO
Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Arts and Entertainment
Actor and director Zach Braff
tv

News
i100
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
News
i100
Arts and Entertainment
The former Doctor Who actor is to play a vicar is search of a wife
film

Matt Smith is set to join cast of the Jane Austen classic - with a twist

News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pointless host Alexander Armstrong will voice Danger Mouse on CBBC
tv

Much-loved cartoon character returns - without Sir David Jason

Arts and Entertainment
tv

Arts and Entertainment
Meera Syal was a member of the team that created Goodness Gracious Me
tv

Actress to appear in second series of the hugely popular crime drama

Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
Life and Style
i100

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Property Underwriter

£70-90,000: Saxton Leigh: Our client a London Market Insurer are seeking a Pro...

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week