The crash of 2008 and the prospects for 2009

Whenever a historical review is made certain years attract attention because of the decisive events with which they are associated. The years 1914, 1929, 1933, 1939 and in more recent times 1956 and 1989 are some that come to mind. The year 2008 is destined to join this group.

This was the year when the supposedly impossible happened: The world capitalist system underwent a financial breakdown which now threatens to repeat, or even eclipse, that which began in 1929.

The figures speak for themselves. The US government alone is committed to providing more than $8 trillion to prop up the financial system. Interest rates charged by central banks around the world have been cut to record lows, in the case of the US to near zero, in a desperate bid to prevent a financial meltdown.

The year has ended with stock markets around the world showing losses not seen since the worst years of the Great Depression. In the US, the S&P 500 index has fallen by 38.5 percent—with much of the drop in the last few months—to record its worst result since the fall of 47.1 percent in 1931.

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