As the year draws to a close, it’s time to consider what this annus horribilis has taught us. What, as they say, are the key takeaways?

The most important lesson that many of us learnt the hard way in 2008 is that stock prices can go down. After several years of picking stocks by the simple method of closing our eyes and taking a random stab at the stock pages and seeing our picks zoom within days, we were amazed when stocks started going the other way. We were flabbergasted when IPOs were listed way below their offer price in spite of the promoter’s promise that he would use the money to set up huge projects at some future date. And we were astounded when, after strenuous efforts by the Reserve Bank of India to cool the economy by raising interest rates, the economy actually started to slow.

15 September: US investment bank Lehman Brothers files for bankruptcy. Mary Altaffer / AP

Another key takeaway from the year was the insight that bubbles eventually burst. At the back of our minds, many of us dimly remembered childhood traumas of burst balloons, but we were persuaded that Alan Greenspan, that serial bubble blower, had found a secret method of re-inflating the bubble just as it was about to burst. When Ben Bernanke succeeded him as chairman of the US Federal Reserve, we believed that he would carry on the good work. Alas, we have been sorely disappointed. Our faith in Fed chairmen has been lost.

Some of us held a quaint belief that free markets weed out the efficient from the inefficient, the profitable from the unprofitable and that competition drives lousy companies out of business. That, we thought, was capitalism. We now know that competition will drive you out of business if you are a small guy with no contacts in Washington. If you are a large bank that has squandered billions of dollars of your depositors’ money, the free market will not only bail you out, but will also pay your bonuses. At worst, capitalism would ensure that you would be nationalized.

The moral of the story is that you should, without further delay, become a bank. I accordingly hereby announce that from today I shall be called the Bank of Manas Chakravarty and will shortly be applying for bailout funds from the US Federal Reserve Bank. The days when they would accept only US government bonds as security for loans is long gone and they now take all kinds of dodgy assets, ranging from mortgage derivatives to commercial paper. I aim to take a pile of old clothes and newspapers to the Fed to try my luck.

Back home in India, we learnt and unlearnt many things in 2008 in rapid succession. At the beginning of the year, we knew that emerging markets had decoupled from the advanced economies and we would soon be blazing our own path to glory. We then learnt that our earlier belief was mistaken and that our stock markets would go down with stock markets everywhere else, but our economy would be fine. After a few months, we realized that although our economy would be affected a little, there would be no credit crisis in India. Next we found out that not only was there a severe credit crunch in India, but that our economy too has been hit rather badly, although, of course, our long-term story is still intact. And somewhere in the middle, we believed that the world’s stock of oil is on the verge of running out and that inflation was never going to come down. We now know that wasn’t true, oil prices have plunged and inflation is dead. So which of these learning experiences is the right one? The big lesson to be learnt from all this is that every story has an equal and opposite story. The other lesson is to never believe the pundits.

Illustration: Jayachandran / Mint

We have also learnt a lot about the ability to grin and bear it from our finance minister. He has been a pillar of strength all through the crisis, telling the markets almost every morning that we have nothing to worry about.

But man does not live by economics alone. Perhaps the greatest lesson of 2008 is that hope springs eternal in the human breast. That is what the election of Barack Obama as President of the US tells us. It also tells us that Americans will believe anything. The same people who believed there were weapons of mass destruction in Iraq or that Al Qaeda and Saddam Hussein were in cahoots with each other, or that Guantanamo was actually a rather humane place, now believe that Saint Obama will right their wrongs, bring justice to the oppressed, heal the sick and drive the money changers from the temple. That’s apart from walking on water.

It’s best to end this piece on a note of hope. One of the really important lessons of the year is our astonishing capacity for resilience. Consider how analysts and economists have swiftly changed from being cheerleaders of the boom to their new roles as prophets of doom. After comparing the bull run of 2007 with the rise of the Nasdaq in 2000, most of us now merrily invoke comparisons with the burst Japanese bubble and that country’s lost decade. Some of us have gone back in history and have gleefully started comparing current events with the Great Depression of the 1930s. Others go even further back and point to the South Sea Bubble or the tulip mania. In that spirit of resilience, I propose to soon issue a really smart research report comparing the downturn in the global economy with the Black Death—the outbreak of bubonic plague that ravaged Europe and brought the Middle Ages to an end. I’m sure there’ll be plenty of lessons we can learn from it. As the Duchess told Alice, “Everything’s got a moral, if only you can find it."

Manas Chakravarty is Mint’s financial markets guru. He also writes a humour column for Hindustan Times.