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."

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind-the-scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
i100(and it's got nothing to do with the Great British Bake Off)
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
news It's not just the world that's a mess at the moment...
footballPremiership preview: All the talking points ahead of this weekend's matches
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
ebooksAn evocation of the conflict through the eyes of those who lived through it
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Mario Balotelli pictured in his Liverpool shirt for the first time
Life and Style
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

Data Scientist (SQL,Data mining, data modelling, PHD, AI)

£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone