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."

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific