Investors said good riddance on Wednesday to one of the worst years on record and prayed that massive government rescue plans will pull the global economy out of its fierce tailspin later in the new year.
But more pain is expected in the near-term as bleak economic reports roll in, signalling more bankruptcies, bad debts and layoffs through at least until early 2009, and more sleepless nights for everyone from central bankers to consumers struggling to pay off mortgages and credit card bills.
The biggest financial crisis in 80 years, sparked by the meltdown of the risky US sub-prime mortgage market, made this year one of the worst ever for investors as recession stalked the global economy.
European shares looked set to end the year with a 45% loss, their biggest ever annual drop and roughly in line with gut-churning declines on other major global markets. The slump wiped out nearly $14 trillion in market value, according to the benchmark MSCI world index of larger companies.
Dublin's ISEQ index plunged by about 66% during the year as over €61 billion was wiped off the value of Irish shares.
The crisis also radically changed the landscape of global finance, bringing down big US investment banks Bear Stearns and Lehman Brothers, saddling many other international banks with huge losses and crippling the credit system that keeps the world economy humming.
No sector has been spared from global banks to cars to resources, and even corner shops. Victims of the crisis are still piling up, with announcements almost daily of fresh company losses, more layoffs, and slumping prices for assets from cars to homes.
Gold was one of the few commodities to end the year higher, gaining about 4%, as panicky investors fled stock markets for assets which are seen as safer during times of trouble.
World governments have pumped more than $1 trillion into their economies to keep business afloat and save jobs, and more aid is expected in 2009 as leaders battle to stave off an even deeper and possibly longer recession.
Global credit markets are showing some signs of improvement, but banks remain reluctant to lend to businesses and consumers, fearing a rash of bad loans as economies worsen.
Government stimulus plans, corporate bailouts and rate cuts also take time to be felt, and their full benefits are still being hotly debated by analysts and economists. Global growth, if any, could be very weak in 2009 as a whole even if consumers are coaxed to start spending again, which is key to recovery.
Investors are now looking to January, which will bring a new US administration when Barack Obama is sworn in as president on January 20. He is expected to unveil a government spending programme which sources say could range from $675 billion to $775 billion over two years.
The new year will also mark attempts by global policymakers to overhaul outdated regulatory systems to head off future crises and give them more power to oversee increasingly complex financial products such as derivatives, which have complicated efforts to fix the latest financial mess.
