The View From Here . . .

By Bob Morgan, Jr.

2008 was certainly a tumultuous year. While there were other important stories, the year was dominated by two related major events -- a sharp downturn in the economy and the election of Barack Obama as the 44th president of the United States.

For much of the year, the economy seemed slow but not all that troubled. Unemployment inched up and the stock market declined somewhat, but many companies reported significant profits. Indeed, the major economic story revolved around the sharp spike in oil prices, which peaked at over $140 a barrel and gasoline prices, which rose to over $4 a gallon in most places. If we were in a recession, it seemed like a comparatively mild one.

Then came September 15 and the fall of Lehman Brothers. Suddenly, it became clear that much of the financial system, including many key players, was in serious trouble as a result of excessive speculation in real estate. While almost no one fully understood the problem, the packaged "securitized" real estate investments held by many important financial institutions became worthless (or at least unsaleable), and this in turn threatened both the viability of the financial institutions themselves and indeed the entire availability of credit throughout the economy. Although Lehman was allowed to fail, action was taken to save other major institutions such as insurance giant AIG.

A downward spiral ensued, as the stock market declined sharply, and by the beginning of October, Congress was being asked to approve a $700 billion rescue package for financial institutions, which eventually passed after being initially rejected in the House of Representatives. While the package may have staved off a financial collapse (very hard to know), other parts of the economy quickly took a negative turn. Many companies announced major layoffs and unemployment spiked. Detroit's Big 3 automakers sought help with a bailout package. Ironically, oil and gasoline prices retreated below $40 a barrel and $2 a gallon.

And so the economy became the major backdrop to the 2008 presidential election. While President George W. Bush remained unpopular throughout the year, the Republicans put up a credible and well liked candidate in John McCain, a maverick and former prisoner of war. Indeed, Mr. McCain and his running mate, Sarah Palin, had a small lead in the polls after the Republican convention until the fateful September 15.

But 2008 was just not destined to be a Republican year. The Democrats ended up nominating, in place of the heavily favored Hillary Clinton, an inexperienced but extremely charismatic figure, Barack Obama, who had only been elected to the United States Senate in 2004. Mr. Obama, an African American with wide appeal across the demographic spectrum, used a brilliantly organized and very well financed campaign (as well as heavy support in the media) to stop Mrs. Clinton and then to defeat Mr. McCain.

Whether Mr. Obama would have won had the fall economic picture been more placid is far from clear, but under the circumstances he was able to convince a majority of voters that his message of "change" was the right one for Washington. The Democrats also gained significantly in both the House and the Senate.

The next most important story, the relatively good outcome of the "surge" in Iraq, was in many ways placed on the back burner by the United States economic turmoil. But in a success for the Bush Administration that will be celebrated more in the history books than in contemporary opinion polls, the level of violence diminished sharply following the implementation of the new strategy, as did sectarian tension.

Of course, there were many other significant news stories in 2008. The Chinese staged a technically spectacular Olympics amid criticism of repressive tactics. Governor Eliot Spitzer resigned under shocking circumstances. Terrorism in Mumbai and the Russian invasion of Georgia again underscored how dangerous a world it is.

But 2008 was primarily about a staggering economy and the election of an untested leader who is the hope to millions of Americans. Certainly we are all united in the hope that 2009 will be a better year than 2008.

Happy New Year to all.