Debt was a common theme in the top national business stories of 2011.
Standard & Poor’s cut America’s pristine credit rating because of the nation’s growing debt. The European Union faces austerity measures, political turmoil and financial uncertainty because of too much sovereign debt. Futures brokerage MF Global Holdings declared bankruptcy after making a disastrous bet on European debt.
The nation and the world paused to memorialize Apple co-founder Steve Jobs and snapped up copies of his biography published after his death. Here’s a look back:
MF Global collapses: The bankruptcy of the New York-based futures brokerage created an uproar with the shocking disclosure that as much as $1.2 billion in customer accounts was missing. Brokers are required to keep client money separate from their own investments. MF Global, led by former New Jersey governor and Goldman Sachs chairman Jon Corzine, declared bankruptcy after making a disastrous bet on European sovereign debt. Chicago-based CME Group Inc., which guarantees the trading on its exchanges, has come under intense criticism, because it is supposed to protect investors.
Occupy Wall Street: The year of the protest featured a movement against greed. It started in Zuccotti Park, in New York’s financial district, targeting Wall Street’s role in the financial crisis. The protests spread to other cities, including Chicago, and were aimed at everything from the undue influence of corporations to high unemployment to the growing gap between America’s wealthy elite, the so-called “1 percent,” and the rest of the population. The movement was criticized for failing to have a unified message or articulating solutions to these issues.
Housing malaise: Four years after the housing bubble burst in 2007, there are few signs of a recovery in the residential market. The biggest head wind is the pipeline of foreclosures that banks are unloading at bargain prices. The foreclosures continue to push home prices lower. On the flip side, rental vacancy rates are falling and rental prices rising.
Stock market’s wild swings: Although bonds and gold did well, the stock market was a roller-coaster ride. August was a scary month. On three days that month, the Dow Jones industrial average lost more than 500 points, including a 634.76-point plunge Aug. 8. There were instant recoveries, including more-than-400-point gains on two days in August. The volatility generally reflected economic uncertainty and disappointment in the lack of political will to reduce the debts in several countries, including the U.S.
Unemployment: The U.S. jobless rate remained at or above 9 percent for most of the year, a nagging issue for the economy. The unemployment rate for blacks (15.5 percent in November) is more than double that of whites (7.6 percent). Job growth has not been high enough to deal with a backlog of more than 13 million unemployed workers. Some of those who were hiring went so far as to prohibit the unemployed from applying, stirring a backlash.
Death of Steve Jobs: Apple Inc.’s charismatic co-founder died Oct. 5 after struggling with illness for nearly a decade, including pancreatic cancer. He was eulogized as one of the greatest corporate executives in American history, reshaping Apple into a technology titan with a string of devices, including the iPod, iPhone and iPad, that revolutionized the way people interact with technology. In his familiar ensemble of blue jeans and black mock turtleneck, Jobs, 56, was not your typical CEO.
European debt crisis: The sovereign debt crisis worsened as economic pain spread beyond Greece. Portugal asked the European Union for a bailout and Italy’s strained public finances led to the resignation of Prime Minister Silvio Berlusconi. EU leaders are pressing for new budgetary rules to tackle the crisis, but Britain is not in favor. It’s no exaggeration to say that as goes Europe, so goes America. The European Union, taken together, is America’s biggest trading partner.
Gold prices spike: Global economic uncertainty and stock market turmoil left investors searching for safer assets. One of the most popular, as is typical when times are tough, was gold. The precious metal peaked in September at more than $1,900 an ounce on the spot market. Gold has since lost about 15 percent of its value, but still, prices rose for the 10th consecutive year. And some analysts predict that next year, the yellow metal will top $2,000 an ounce for the first time.
Insider-trading trial of Raj Rajaratnam: Not since the mid-1980s has an insider-trading scandal grabbed such widespread attention. Wiretap evidence had Rajaratnam, a Sri Lanka-born hedge fund manager, chatting with insiders about trading in companies such as eBay, Intel and Goldman Sachs. He was convicted of conspiracy and securities fraud and sentenced to 11 years in prison. One of the men accused of passing information to Rajaratnam is Rajat Gupta, former head of McKinsey & Co. and former director of Goldman Sachs, who faces criminal charges.
U.S. loses pristine credit rating: When the credit rating firm Standard & Poor’s cut America’s credit rating in August, it was a watershed moment. It was a subtle shift from a AAA rating to AA+, but no one had ever questioned the creditworthiness of the country. S&P cited the nation’s growing debt, which has topped $15 trillion, and lack of political will to reduce it. The downgrade spooked financial markets and meant that Treasury bonds are, for now, rated lower than bonds issued by countries such as Britain, Canada and France.