The first 10 years of the new millennium are done, and looking back we can dub it the “Decade of the Worst.”
Gary Weiss publishes at Portfolio.com his top ten worst list of the decade:
For people who have gone through a change in millennium, the mere entrance of a new decade may not seem like much. But what a decade! Why, has anyone ever seen anything so awful?
Think of all the “worsts” that blessed the business world since 2000: worst stock-market performance, worst scandals, worst companies, worst CEOs, worst regulators, and, all too often, worst journalism. We missed a lot, but then again, we were part of the decade’s agony (see No. 10).
So in compiling this list of the top-10 biggest stories of the decade, I had a great deal of big and usually bad news to choose from, and some of gaudier stories of the decade didn’t make the cut. Martha Stewart’s trip to prison didn’t make the cut, and neither did Dick Grasso’s nine-figure paycheck. Sure, there were smatterings of good news here and there, but they got muscled out by the Big Terrible (No. 1) and its accomplices.
So here they are, in inverse order of importance:
10. The Death of Old Media
As the decade began, AOL was merging with Time Warner in what was widely heralded as an indication of the future for old-fashioned paper-and-ink media properties. It was a sign of the future—as in “funeral.” By 2009, AOL was de-merging from Time Warner, and the old media were in a state of disintegration. Magazines shuttered, and newspapers were on the endangered-species list. The formerly august Miami Herald was actually asking for reader contributions. The 1980s newspaper film Absence of Malice today would have the title Absence of Advertisers.
9. Automakers Go Bust
In any other decade, the bankruptcy of two of the Big Three automakers, General Motors and Chrysler, would be the defining events of an epoch. In this decade, they rate also-ran status. It was hardly earth-shattering news that the Big Three were failing to make cars Americans wanted to buy, after all. In a sense, this was just the dénouement of four decades of mismanagement and decay.
8. Enron and Friends
Jeff Skilling, his cohorts at Enron, and all the other corporate bad actors of the first half of the decade—John Rigas of Adelphia Communications, Dennis Kozlowski of Tyco International, and their counterparts at Global Crossing and WorldCom—made people mad as hell. Until, that is, they stopped being mad and forgot about the whole thing. Sarbanes-Oxley was passed to prevent it from ever happening again. By the end of the decade, it was all ancient history and Sox was being dismantled.
7. Bernard Madoff
The corporate scandals of yore could not compete with the man who is arguably the worst financial criminal in history. Madoff stole more, over a longer period of time, than anyone since the Spaniards robbed the Incas. But look where he stands on the list: Lots worse to come.
6. The Real Estate Bubble
The all-American act of buying a house became a crucial part of a gargantuan pump-and-dump scheme. Take overvalued assets, combine with predatory lending and Wall Street bankers selling toxic derivatives to uninformed institutional investors based on absurd credit ratings, and one has the ingredients for a pretty wild crash.
5. Derivatives Mania
Derivatives, including the mortgage-backed securities and swaps that turned banks like Lehman into ashtrays, have been around for a long time. Long enough that there was plenty of opportunity to poorly regulate them. Just before the decade began, in 1999, Congress exempted over-the-counter (translation: “the worst”) derivatives from regulation, at the urging of, among others, Federal Reserve Chairman Alan Greenspan. By October 2008, “the Maestro” was apologizing for the mess that resulted.
4. The Subprime/Real Estate Crash
Any attentive high-school economics student will tell you that every boom is followed by bust. But this being the Decade of the Worst, we didn’t have any old real estate bust. We had a crash accelerated by all kinds of exotic mortgages, their existence a product of years of regulatory neglect, as well as subprime mortgages sold to people who could not afford them. It took No. 3 to turn a bad downturn into an economy-crunching disaster.
3. The Bear Stearns-Lehman Brothers Implosion
By an accident of history, Bear Stearns was the first major Wall Street bank to suffer from its own greed-induced venture into toxic derivatives and mortgage-backed securities. So Bear got the Federal Reserve bailout and the sale to JPMorgan in March 2008, while Lehman was allowed to go bankrupt six months later. To this day, nobody can adequately explain why the Fed allowed Lehman to sink, and the ethically challenged Bear to survive.
2. The Market Meltdown of 2008
Fortunately, for those of us who like the simple life (i.e., those without savings), a cyclical decline in the market that commenced in October 2007 when the market indices peaked turned into a rout when Bear, Lehman, and the rest of the major banks imploded because of their serial incompetence. By March, when Bear self-destructed, the market was down 50 percent. All the gains of the 1990s were gone. Even brainy John Thain couldn’t rescue Merrill Lynch—or himself. That meant we were doomed.
1. The Great Recession
Now we come to the granddaddy of big stories of the decade, all that we’ve been building up to for the past 10 years. Stagnation, high unemployment, and the worst market crash since 1929 combined to give “great” to this particular recession. Hey, it didn’t happen without a lot of help, giving a cyclical twist in the business cycle the odor of premeditation. Where would we have been without the bankers screwing up and betting their Hamptons mansions on mortgage-backed securities it took a supercomputer not to understand? Or the real estate boom and bust that the predatory lenders exacerbated, with help from somnolent regulators?
