March 9 2009. A date etched on my mind. The day the Dow Jones in New York fell to 3,790. A fall of 57 percent since its all time high of more than 14,000. I will always remember the low point of the stock market collapse from the Great Recession of the noughties. In London in the same period the FTSE was down 47 percent, while in Hong Kong the Hang Seng in the same week registered a loss of 63 percent from its all-time high of 21,813.
It is easy to forget that back in spring we feared that worse might be about to befall us. It is only with hindsight, of course, that we can now see that it was the turning point. In the months following, markets rallied strongly. The Dow has gained 57 percent, the FTSE 48 percent and the Hang Seng, which fell the sharpest, has risen the fastest — by 63 percent — from its recession low.
Yet the stock market recovery seems to have been totally divorced from the real economies afflicting Europe and the United States. I recall reading the news in February when there was just a litany of bankruptcies and factory closures. With them came the inevitable job losses.
So, even as I have being reporting stellar gains for equity markets and gold, I have tried to keep at the forefront of my mind the terrible toll this recession is having on jobs, families and homes. It is too easy to get caught up in the “it’s all over bar the shouting” mentality and forget that there are tens of millions of people who have been reduced to poverty, with homes repossessed, pension valuations destroyed and careers derailed. We forget this at our peril.
But I don’t want to be totally depressing. After all, even in the trenches of the First World War they managed to find some festive spirit. I can do better than just moan. Let us look forward.
The accepted view is that it is going to be a long, hard slog towards recovery. The G20 finance ministers acknowledged this in September, saying “the recovery is uneven and remains dependent on policy support, and high unemployment is a major concern. “ No-one really disagrees. But I wonder (well, more like whisper) whether it will be that slow before we start to see real benefits. In this festive period can we not at least let imagination trounce worry, and believe 2010 will be better than we fear?
To be sure, in the developed world we will be paying down horrendous deficits for a generation, which will inevitably act as a brake of economic activity. But I think the story of 2010 may well be how feel-good growth returned faster than we had assumed. If we look at the pace of innovation in technology, for instance the speed with which rival mobile phone makers brought out me-too iPhones, which we snapped up. Or the growth of notebook computers that are rapidly filling our briefcases; the entrenchment of the digital age in our everyday live. There is the restoration of bank balance sheets, the return of fledgling M&A activity, and a new role for pacific nations as the engines of growth which is already making a difference.
The response of Ben Bernanke, chairman of the U.S. Federal Reserve, in handling the recession (“I will not let history repeat itself”) showed us that the rules of the game hadn’t changed. But the way we are playing it has changed quite a lot. Individually we are more productive than before. We are more global than our predecessors. We are more prepared. Collectively, policy makers acted like never before. This is not hubris. It is the realisation that the first decade of the 21st century has come and gone, and we are economically bloodied but still standing.
Back to March 9th. A day I will always remember. Forget the stock market fall. I remember March 9th for a much more important reason. It’s my birthday.
Whatever you are up to in the year ahead, be it investing or gardening, in your work and your play… I hope it’s profitable.
– End –
Richard Quest is a CNN correspondent based in London,
host of the weekday one-hour program “Quest Means Business”.
For program highlights and more, go to www.cnn.com/qmb
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