Here is a top 10 list, ordered by year. Investors were getting rich off unprofitable stocks with high prices and higher price/earnings ratios—firms like software companies and all things computer and internet. Cisco Systems, for example, traded at more than 150 times earnings in March of 2000. In April 2000, an inflation report caused the speculative bubble to burst and there were huge investment losses. It was only the third time in history that the New York Stock Exchange was shut down for a period of time. In this case, it was closed from September 10–17. Besides the tragic human loss of that day, the economic loss cannot be truly known. Some estimate that there were more than $40 billion in insurance losses alone. Approximately 18,000 small businesses were either displaced or destroyed in Lower Manhattan after the Twin Towers fell. The Department of Homeland Security was created. 9/11 caused a catastrophic financial loss for the U.S. Enron hid billions of dollars of debt from its shareholders in failed deals and projects. Furthermore, it pressured its auditors, Arthur Andersen, to ignore the issues. Shareholders lost more than $60 billion. This led to the passage of the Sarbanes-Oxley Act of 2002, which expanded penalties for accounting fraud and instructed accounting firms to remain independent of their clients. Other firms, such as Tyco and Worldcom, experienced similar scandals. These scandals shook the securities markets and investor confidence. The corporate fraud scandals, such as Enron, along with 9/11, were contributors to this loss of investor confidence in the stock market. Countries like the United States initially started outsourcing work to China and India because of cheap labor, but this is no longer the case. They kept their work in the two countries because they found talent—talent for innovation in high-tech fields. Millions of scientists and engineers are educated in India and China each year, compared to a much lower number in the U.S. The balance of power in technologies is likely to move West to East. Hurricane Rita quickly followed Katrina, only making matters worse. Between the two, more than $175 billion in damage was done. More than 500,000 jobs were lost and more than homes were destroyed. Hundreds of thousands of people were displaced, and more than 1,800 were killed or missing. The effect on oil and gasoline prices was long-lasting. Banks made mortgage loans to these individuals for houses with inflated values. As the interest rates rose and their adjustable-rate loans got more expensive, they couldn’t make their mortgage payments. Soon, large financial institutions were holding portfolios of loans that were worthless. The subprime mortgage crisis and the “credit crunch” ensued. In one of the largest investment fraud schemes in Wall Street history, Madoff defrauded his investors of more than $50 billion. He was subsequently sentenced to 150 years in prison. The great investment banks that had stood on Wall Street began to collapse due to the sub-prime mortgage crisis and serious corporate fraud. During the last months of the Bush Administration, the federal government stepped in to bail out some of these institutions in order to keep the U.S. financial system afloat. By the time the Obama Administration reached the White House in January of 2009, the economy had contracted and the recession had taken hold. At the end of 2009, there were signs of recovery, but it didn’t happen overnight.
