Fall of the Dot-com
It started not with a boom, the prices of technology stocks that had been listed without their companies ever making a dollar of profit. It ended with a major bust.
All that was needed was the promise of limitless growth on the Internet's new e-commerce platform. By March 2000, the technology-heavy Nasdaq Composite Index in the United States had crossed the 5,000 mark - more than doubling its value in just one year. But that proved to be the peak of the bubble and the ensuing crash wiped out US$5 trillion in market value of technology companies from March 2000 to October 2002.
In Singapore, the pain of the dot.com bust was felt most acutely by some unit trust investors. Some had poured their life savings, after receiving their CPF retirement payout, into technology funds which were heavily marketed at the time - even to the elderly.
Tech funds lost as much as 70 per cent of their value following the crash, and most are still underwater even today.
Enron
It may have been named 'America's Most Innovative Company' by Fortune magazine for six consecutive years, but no one expected it to apply its creativity so expertly to cooking its books. From inflating revenues to hiding losses in 'special purpose' subsidiaries, the litany of sins revealed by a whistle-blower in October 2001 eventually led to what was then the largest corporate bankruptcy in US history.
The Enron debacle was followed by a series of scandals at big names like Tyco and WorldCom. The accounting scandals eventually led to the establishment of the Sarbanes-Oxley Act in 2002 (which punished fraud more severely) and a more general push for corporate transparency worldwide.
Greenspan's legacy
UNTIL his retirement in 2006, Mr Alan Greenspan was arguably the most closely watched individual in the world. As the longest-serving chairman of the powerful US Federal Reserve, he presided over the world's most important financial variables - US interest rates and the US dollar. Yet, he once famously said: 'I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said!'
What is now clear, however, is the octogenarian's principles and policies largely shaped the path of the global economy this decade. His favourite remedy of aggressively easing interest rates - and thus encouraging spending and borrowing - helped the world get back on its feet once again after the dot.com bust and the Sept 11 terrorist attacks.
OIL PRICE
In the 80s and 90s, the crude oil price generally remained stable at below US$30 a barrel, after adjusting for inflation, cheaper than you pay for same amount of say, orange juice...
But oil prices begun rising sharply in 2003 in tandem with a worldwide economic boom, hitting a peak of US$147.30 a barrel in July 2008. The boom was a result of rising demand for oil, particularly in rapidly industrialising nations like China and India. At the same time, oil supplies worldwide are dwindling. Financial speculators also moved in. The relentless trading of oil contracts exacerbated the price spike and led later to calls for increased regulation.
The story of too little supply chasing too much demand spilled over to other commodities such as agricultural produce, and the steel, copper and other metals that fed the mid-decade building boom.
The result of all this was the highest inflation seen in decades.
Back home here in Singapore, it hit almost 7 per cent, with the cost of everything from rice to cooking oil rising sharply. Some major companies were forced to make one-off payments to staff to help them cope. But just as it caused pain, the boom enriched oil-producing regions like the Middle East and Russia. Oil money would pay for some of the most spectacular urbanisation the world has ever seen, in cities like Dubai, Abu Dhabi and Moscow.
World class oil rig builder Keppel FELS in these two years of high oil price, signed many rig contracts with deliveries stretched up to year 2011 and in 2009, it was the best year of performance with 13 rigs delivered to overseas client. Though contracts award was slow in 2009, the yard is still being kept busy with ongoing contracts. The next wave of rig orders could be from Brazilian sector as Petrobras, the state-owned company, has already announced their few years ahead plan to explore new fields recently being discovered, one of them the Tupi field.
Property Craze
PROPERTY will be a bittersweet note when investors look back on this decade.
In the US, cheap loans given out by banks, even to borrowers with terrible credit histories, helped chase up house prices. Americans felt richer and spent more, fuelling an export boom that drove much of Asia's phenomenal growth this decade.
But the eventual bursting of the property bubble - and the ensuing collapse in home prices - had the opposite effect on Asia as Americans slammed their wallets shut. Exports collapsed by up to a-third, sending countries like Taiwan, Korea and Singapore into their worst recession in decades.
The US was not the only place where property prices soared. The economic boom years of 2004-2008 also led to global investors putting their money in the promising property markets of Asia.
In Singapore, the boom in luxury property led to record prices of over $5,000 per sq ft, a frenzied market for the collective sales of old condo sites. The bubble burst with the onset of the financial crisis late last year, with prices correcting 20 per cent to 30 per cent.
But a surprise boom in suburban properties followed barely six months later, ensuring that property stayed the way it was for most of the decade. The Singapore government step in to cool the market by letting off new sites for development and increasing the numbers of HDB units to be built, either the design and build or the standard government highly subsidised 4&5 room units.
Sub-prime crisis
The global financial crisis of September 2008 will probably go down in history in the decade. But even though its story has been told countless times, it is still not fully understood by many.
What seems to have happened was that new instruments in the financial markets allowed banks to give 'sub-prime' loans to dodgy borrowers in an almost limitless way. This was because the banks were able to re-package and pass on the risk. The housing market collapsed in US, investments became close to worthless, most of the world's biggest banks and insurers had already chalked up trillions in inter-connected debts to each other, all related to these dodgy instruments.
The crisis bankrupted 158-year-old Lehman Brothers and its collapse in turn threatened to bring down storied names like AIG, UBS, Morgan Stanley and Goldman Sachs. Financial markets went into a tailspin and credit seized up. Panicked consumers and companies stopped spending, trade slowed and jobs were axed. By the time spring came round, economists were painting doomsday scenarios of double-digit declines and an uncertain, slow path to recovery.
In Singapore, many retirees sunk their live saving pension funds into minibonds suffered the same fate and their money invested became worthless and all of them are now still waiting on hope of getting some "refund" provided the law is on their side.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_291048.html
More than US$6 trillion in stimulus spending was pumped into economies early 2009 when Mr Barrack Obama just took over office from Mr Bush in a bid to get credit and business flowing again. It was not a smooth and immediate cure to the problem and took almost a year before we see some "green shoots" started sprouting in some global continents. China and India were surprisingly in better shaper than others.
"Chindia" [ China & India combine ]
Ignoring the busting trends, the most enduring story this decade has been the rise of Asia's two economic giants - China and India.
In the last 20 years, China has been growing at more than 9 per cent per year, and India by about 6 per cent. China is already narrowing the gap with the world's No. 2 economy Japan, and by mid-century, it should overtake the US as No. 1. By then, China and India could be producing half the world's goods and services.
To make things more intimidating, China and India seem to complement each other's strengths. China is a manufacturing and engineering powerhouse, while India excels in services industries like software, accounting and design.
And that's not even considering both countries' rapidly expanding consumer bases. China is already the world's largest consumer of mobile phones and the third largest buyer of cars. India's rising middle-class is already making its presence felt, snapping up property and other investments in major cities of the world.
What happens next? Well, all eyes are on policymakers to see if they can properly control economies that are speeding trains that threaten all the time to veer off-course.
But an equally big worry is whether these giants will team up in future and dwarf everyone else. Annual trade between the two economies was just US$52 billion last year. Let's keep our finger cross.
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