ARTICLES MODERN

There was almost no place to hide from the crash of 2008.
When the New York Stock Exchange called bell years Wednesday, it tolled for virtually anyone with money in the stock market.
Finally, scrap sinistră only confirmed what investors have known for months: it was a very bad year to own stocks, any stocks - indeed, one of the most ever.
In a mere 12 months, the Dow Jones industrial average plunged 4488.43 points, or 33.8 percent, the most punishing loss since 1931. Blue chips like Bank of America, Citigroup and Alcoa lost more than 65 percent of their value. The broader Standard & Poor’s 500-stock index was down 39.5 percent, almost exactly matching its decline in 1937.
All told, about $ 7 trillion of shareholder wealth - the gains of the last six years - was removed in a year of violent market swings.
But what is striking is not only decreases the magnitude, location where they are, but also their width. All but two of the 30 Dow Industrials, Wal-Mart and McDonald’s, have decreased by more than 10 percent. Almost any industry that has been spared the crisis that occurred in the first subprime mortgage metastasized market and the economy was sunk in what could be a long recession.
As the new year dawns, Wall Street is looking to Washington, where the balance of financial power in a jet of permanent, in recent months. Analysts and investors are focusing on what Obama arrived administration and the Federal Reserve will do to revive the economy and financial system.

It is a remarkable turnabout from the mid-1990s, when he helped Wall Street traders to drive economic policy. Back then, bond investors flexed their financial muscle and asked Clinton administration and a Republican Congress to reduce the federal budget deficit.

These days, the market in ultra-safe U.S. Treasury securities appears as a refuge, even as the deficit balloons in the cost of waiving banks, insurance companies and the Detroit auto companies. Many investors, who have lost their stocks and other investments, are buying Treasuries that offer little or no return. They are simply content to get their money back.

“The only risk taker government is willing,” said William H. Gross, chief investment officer of Pacific Investment Management Company, or Pimco, the giant bond trading firm. Speaking of the financial epicenter of the world, added: “There is New York, Washington, it is.”

Like many money managers, Mr. Gross is a conservative - describes himself as a Reagan fan of the road “- who prefer generally limited government involvement in markets. But he and others say that the government’s sweeping intervention in private industry and the markets, although sometimes flawed, it is necessary to prevent a collapse of the financial system. They are hoping that policy makers do even more to stimulate and revive a moribund economy, the financial markets.

Given the damage in the markets, however, policy makers face daunting challenges.

“When we bear market, they usually take twice as long to reach this far down,” said Robert C. Doll, vice chairman of Blackrock, the large investment firm.

Markets have become incredibly volatile, especially since Lehman Brothers has sunk into bankruptcy in September. Since then, the S. & P. has moved more than 5 percent in both directions, at 18 days. There were only 17 days of such previous 53 years, according to calculations by Howard Silverblatt, an index analyst at S. & P.

Diversification - the idea that it is unwise to put all your eggs in one basket - not to pay for investors in 2008, casting doubt over the cornerstone of modern investment. American market was by far the worst hit in 2008. Stocks fell at 55 to 72 percent in the so-called BRICE economies - Brazil, Russia, India and China - which have been darlings of the late, great boom. Stocks in the developed European and Asian markets also fell sharply, though less than their emerging. Many goods like oil and copper fell.

Losses in credit markets, which are at the heart of the financial crisis, appear small in relation to the devastation in other markets. International Monetary Fund has estimated that in October banks and other investors would suffer $ 1.4 trillion in losses on loans and securities, a loss of only 6 percent. Globally, financial institutions have already reported $ 1 trillion in write-downs, according to Bloomberg.

IMF estimates, however, does not count losses on derivatives, the complex instruments that derive their value from other assets. Losses on these instruments could exceed the cash markets of so-called because they are much larger than the assets that underlie them.

A spokeswoman for I.M.F. said the fund estimates do not include those losses, because they were transfers of wealth from one part of a transaction to another. For example, if the insurer American International Group lost $ 1 billion on a credit-default swaps, a type of derivative, it makes payments to customers like investment banks.

These complex financial instruments will be put one of the biggest challenges for policy makers in the coming year. Many investors have lost confidence in banks, insurance companies and other financial intermediaries, in part because they do not know if these companies are opaque assessment tools as appropriate. Some companies can be quite toxic sludge transporting them to sink, while others may be relatively unscathed.

“Until these assets can be removed from the balance sheets of bank owners or until they get a better understanding of what is the value of these assets, which will be uncertainty,” said Douglas M. Peta situs, an analyst Independent market.

A wider focus for policy makers will be reviving the economy. Most financial and political analysts expect the Obama administration to adopt a stimulus package that could approach $ 1 trillion. Effort intended to create three million jobs by spending money on infrastructure, green energy technology, help to states and other initiatives.

Many analysts say such an effort will help to revive the economy, but not immediately. Infrastructure spending, for example, can have a powerful impact by stimulating demand and creating jobs, but more like the economy, it often takes years to work.

Some seek to efforts by the Treasury and fed to jump-start lending by lowering mortgage rates and improving market in bonds backed by small business, auto and credit card loans. A recent drop in mortgage rates has already established on a Refinance boom, but analysts say home prices in many parts of the country are still too high for many would-be buyers. Moreover, employment and savings, most likely will have to come up for a period of time before consumer confidence came to buy houses and enough money for down payments.

“Overboard, they can prevent a slide ninth, and they deserve a lot of credit, if they achieve that,” Martin S. Fridson, director of Fridson Investment Advisors, a marketing firm, said about the decision . “I just do not think I can push a button and saving the stock market and come back.”

Thomas J. Lee, chief equity strategist, at JPMorgan Chase, said a recovery since the beginning of the year could give way to another sell-off, before the stock market in the final later in fund for years. Mr Lee said his forecast reflected “how unconventional is the current recession.” Unlike the past, decision makers can not rely on consumers to push forward the economy and the costs of borrowing, he said.

“This is a recession where households are net debtors,” he said. “They lost money on houses and capital. That rarely happened, at least in the 1950s.”

Mr. Doll Blackrock agree that consumers should not “run back and the strength of the economy’s path.” But he claims that, however, several important markets, including stocks, may be near their bottom. The Fed, he argued, has taken on an activist role in more new markets and the administration is likely to push through a huge stimulus.

Such sentiments have helped probably drive the S. & P. 500 index 20 percent since Nov. 20 and investment grade corporate bonds up by nearly 10 percent in October.

“Maybe I saw a bottom,” said Mr. Doll. But he added that as the economy, “the stock market recovery will be muted, too.”