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The month the world economy came to a crashing halt.
September 10, 2009 12:42 AM

Last year, in September 2008, the world economy suffered through it's worst series of calamities since the Great Depression. Bloomberg.com is taking a little trip down memory lane with a series of articles detailing the horrific series of events that led to our current meltdown. It ain't a pretty picture:

The warning was ominous: "Massive global wealth destruction."

That's what Lehman Brothers Holdings Inc. executives predicted before they filed the biggest bankruptcy in U.S. history. "Impacts all financial institutions," read one bullet point in a confidential memo prepared for government officials obtained by Bloomberg News. "Retail investors/retirees assets are devastated."

Thus starts the column, interspersed with tales of the effects on normal workers around the world:

Willard Scolnik, a 78-year-old retired architect in Palm Harbor, Florida, who said he had $400,000 in Reserve Primary that he needed to help pay for a lung transplant for his son, was one of the unlucky ones. He couldn't get his money out.

Boulder County was forced to write off $687,000, its share of the trust's losses, according to Bob Hullinghorst, the county treasurer. That would have paid for 20 new health-care employees, he said.

"It makes me mad," Hullinghorst said. "We thought our money was safe."

Sun Kwan, 58, a retired parks worker, said he invested $285,000, most of his life savings, in Lehman minibonds. He was among an estimated 43,000 in the city who bought $1.8 billion of the notes, according to the Hong Kong Monetary Authority. Sun lost it all and has taken part in protests since October, rain or shine, trying to get his money back.

On the otherwise uninhabited Atlantic Ocean island of West Caicos, work stopped in October on the Molasses Reef Ritz- Carlton Hotel and Residences, where cottages were priced at $6.5 million. About 400 Chinese employees of an Israeli construction firm, Ashtrom Properties Ltd., didn't get paid, according to Jonathan Siegel, New York-based managing director of the project for Logwood Hotel Development Co. Some of them protested, surrounding the temporary housing occupied by their supervisors, preventing them from leaving until they received their money.

Of course the bankers in New York were oblivious to stories like these:

The bankers who gathered at the New York Fed last September anticipated little of this. Instead, their meetings were filled with confusion, false starts and dust-ups.

That article, along with another from McClatchy are must reads this month to understand what happened and the extent of the damage that has occurred. From the Washington McClatchy bureau:

One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes.

Historians will look to September 2008 as a watershed for the U.S. economy.

On Sept. 7, the government seized mortgage titans Fannie Mae and Freddie Mac. Eight days later, investment bank Lehman Brothers filed for bankruptcy, sparking a global financial panic that threatened to topple blue-chip financial institutions around the world. In the several months that followed, governments from Washington to Beijing responded with unprecedented intervention into financial markets and across their economies, seeking to stop the wreckage and stem the damage.

One year later, the easy-money system that financed the boom era from the 1980s until a year ago is smashed. Once-ravenous U.S. consumers are saving money and paying down debt. Banks are building reserves and hoarding cash. And governments are fashioning a new global financial order.

And on it goes...and on it goes...

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