December 31, 2010
2010 brought the best and worst of times. We witnessed a president grasping at straws to defend his choices and maintain his constituency, a midterm election largely won by a party named after a beverage, a tumultuous economy even after the recession was declared “over,” and a deficit that was pointed in only one direction — up. Yet through it all, an historic (and expensive) health care bill was passed, the financial markets soared and unexpected people triumphed. In the end, some emerged victorious, and others clearly sank to the bottom. Below, TFT’s annual list of fiscal winners and losers:
1. LeBron James - Hoop Dreams Award
Rising NBA stars can only dream of being LeBron James. After James became a free agent last summer, a number of cities overreacted to the possibility of nabbing the star. They pleaded, sang songs and performed embarrassing publicity stunts, hoping to grab him and increase much-needed revenue from basketball fans. (Though as TFT found out, sports stars actually bring little revenue to cities.) James ultimately chose the Miami Heat, agreeing to a six-year, $110 million contract. Not bad, but not the biggest. Baseball pitcher Cliff Lee recently signed a 5-year, $120 million contract with the Philadelphia Phillies.
2. General Motors - Comeback of the Year Award
Bailed out by Uncle Sam last year and thought to be on its way out, GM took everyone by surprise this year by having three consecutive profitable quarters, and made headlines in November when it sold $15.8 billion of common stock in an initial public offering, the largest of the year and one of the biggest in history. Experts credit the incredible turnaround to its “reinvention” ad campaign and successful electric car, the Chevy Volt. Not too shabby for a company on the verge of bankruptcy a mere 17 months ago.
3. John Boehner - Top Tear Jerker Award
An Ohio-born congressman from a working class family of twelve brothers and sisters, Boehner was reelected to the House by a landside in the November midterm elections and will become the next speaker of the House. A staunch critic of Obama and running on a platform of balancing the federal budget without raising taxes, Boehner’s win was partly credited to the Tea Party frenzy. But he’s also known for his impassioned speeches — and the tears that go with them — about job creation and the middle class.
4. Facebook - Supersized Social Register Award
Facebook reached a milestone of 500 million users this summer, and added another 50 million by the fall. Founder Mark Zuckerberg, now 26, is the youngest billionaire in history with a personal fortune estimated at $6.9 billion. His story, warts and all, is captured in the movie The Social Network, which took home numerous accolades and is now a possible contender for a Best Picture Oscar. He was recently named TIME magazine’s “Person of the Year,” which wrote that we have officially entered “the Facebook age.” With half a billion people spending more than 700 billion minutes on Facebook collectively every month, and growing at a rate of 700,000 new members a day, it certainly seems that way.
5. The Tea Party - Rebels with a Cause Award
Starting as a tiny grassroots movement in 2009, the Tea Party helped the Republicans win a majority in the House in the midterm elections. Largely motivated by the government bailouts, opposition to the health care bill and higher taxes, the party paid homage to the Boston Tea Party and used the same slogan, “no taxation without representation.” Their rhetoric struck a chord with frustrated Americans who showed their approval at the voting booths. But the Tea Party’s intractable positions may push their party too far to the right to win in 2012.
6. The Wealthy - Estate Capital Award
Not that the wealthy really ever lose, but 2010 was particularly flush for the rich. The Bush-era tax cuts were generously extended to the wealthiest 2 percent of U.S. households in December, and the elimination of the estate tax made some even richer, including the heir to George Steinbrenner’s $1.1 billion estate. Income inequality in the U.S. is at an all-time high: From World War II until 1976, the top 10 percent of the population made less than a third of national income. Today, the top 1 percent rakes in 24 percent of income. Yet supporters of tax breaks for the wealthy claim that helping the rich get richer will stimulate a stagnant economy and trickle down to everyone.
7. Pre-existing Conditions - A Seat at the Table Award
While Obama’s signing of the historic health care bill in March may have seemed like a big win for his administration, many see it as digging a deeper debt trench. Health care spending continues to rise, doctors and insurers are worried, and millions of uninsured will now be forced to pay for insurance or otherwise face fines — a plan that’s being challenged as unconstitutional. But one group did come out on top: those with pre-existing conditions can no longer be denied insurance. Leaders on both sides of the aisle admitted the practice was unfair, especially when it comes to children, and supported outlawing the discriminatory practices.
8. Groupon - Let’s Make a Deal Award
It’s not every company that can confidently turn down a $6 billion offer from Google. The nascent deal-a-day web start-up exploded this year, going from 3 million users in January to over 22 million today, and according to Forbes, is “the fastest growing company ever.” Not bad for the middle of a recession. Americans love their coupons, and no economic downturn will stop them from snagging a deal.
9. First-Time Home Buyers - The Keys to the Kingdom Award
Three years ago, home prices were skyrocketing and families and speculators were blindly jumping in to the market thinking that real estate values would rise even more. We all know how that ended. Yet this year, buyers who took their first brave step into the housing market were winners with mortgage rates at all-time lows along with a generous government tax credit to help fuel the market. People who took the deal are reaping the benefits.
10. Gold - All that Glitters Award
With the euro down, and the value of the dollar in question, investors are turning their backs on paper currencies and turning to their old beloved staple —gold. Even though the U.S. dollar has not been pegged to the gold standard since 1971, the precious metal has been steadily rising, shooting up 26 percent this year alone, and hitting a record of $1,432.50 an ounce on Dec. 7. Thought of as a guard to high inflation, which is looking more likely with the Fed’s program of quantitative easing, big and small investors everywhere are buying up gold. It’s becoming so popular, JP Morgan even recently reopened a long-closed vault under the streets of Manhattan, and the president of the World Bank suggested we return to the pre-Nixon gold standard.
1. Tony Hayward - The Foot in Mouth Award
Possibly the most hated man in the country during one of the worst environmental disasters, BP’s former chief executive took a beating after the Deepwater Horizon oil rig exploded and started spewing thousands gallons of oil into the Gulf of Mexico. He initially downplayed the severity of the spill, and continued to put his foot in his mouth throughout the ordeal, saying at one point: “There's no one who wants this thing over more than I do; I'd like my life back.” His repeated bungling caused BP to replace him in July, and with the government’s recent lawsuit against BP, he’ll likely be under the microscope again. It’s looking like he won’t get his life, or his $4 million BP salary back anytime soon.
2. U.S. Classified Intelligence - The Toppled Secret Award
The U.S. government spends over $80 billion on intelligence agencies, and a good portion of that is to make sure it doesn’t end up in the wrong hands. Yet thanks to 39-year-old Julian Assange of WikiLeaks, that security has been breached to the embarrassment of the State Department and the Department of Defense. In July, he leaked Afghan War military logs, considered to be one largest leaks in U.S. military history, and then again in November Assange began releasing classified diplomatic cables. The Justice Department is launching a criminal investigation of the diplomatic cable leak, but so far has been unsuccessful. In the meantime, Assange continues to give Uncle Sam the finger, winning awards, and ranking first among TIME magazine readers for “Person of the Year.”
3. Christine O’Donnell - The “I Am Not a Witch” Award
With her sweet and bubbly demeanor, the 41-year-old Republican nominee for the Delaware Senate seat came onto the scene sure to capture the hearts of conservative Americans just as Sarah Palin, one of her endorsers did in 2008. The similarities to Palin were all there: the folksy charm, the bright suits, the socially-conservative platform. But some cringe-worthy quotes caused her downfall, in addition to some questionable finances. After admitting to practicing witchcraft in her youth, she claimed she was “not a witch” in a campaign ad, then failed to be able to name a single Supreme Court decision during a debate. In September, the Citizens for Responsibility and Ethics in Washington accused her of using her campaign funds as “her very own personal piggy bank,” and she’s now under federal investigation for possible misuse of funds. Maybe it’s time for her to get a reality show?
4. The Euro - The Chump Change Award
Once heralded as one of the greatest economic success stories of the 20th century, and the second most popular reserve currency, the euro took a stomach-churning freefall this year, plunging to a four-year low against the dollar in May. Mainly caused by the debt crises of Greece, Ireland, Spain, Portugal and Italy, many have begun to question not only the strength of having a single currency for 16 countries, but of the EU’s entire foundation. Having had to bail out both Greece and Ireland, the EU is once again in turmoil as Portugal and Spain teeter on the edge of financial ruin. As we head into 2011, the euro heads into survival mode.
5. Meg Whitman - The Money Can’t Buy Everything Award
The political neophyte and former eBay CEO has spent an estimated $140 million of her own money in search of a new job (more than any other gubernatorial candidate in U.S. history). But neither her big bucks nor her high-octane corporate connections could earn her a seat in the Sacramento state house. The 54-year-old Republican joined the race in February 2009 to replace Arnold Schwarzenegger. Her personal wealth, valued at $1.3 billion by Forbes, was thought to give her the edge against frugal Jerry Brown state attorney general and former governor who reportedly only spent $11 million on his own money. But she came under fire for a past housekeeper's illegal immigrant status, admitted to an inconsistent voting record, endured rape charges against her son, and ramped up her verbal attacks on Brown — all of which clearly made Golden State voters uncomfortable, proving that money doesn’t always buy you votes.
6. Operation Iraqi Freedom - The Mission Accomplished Award
The controversial Iraqi war that began in 2003, was declared officially “over” this year. It was also declared over when President George W. Bush prematurely delivered his “mission accomplished” speech. This time, the end may at least be in sight. Obama gave the “it’s over” speech in August saying “it’s time to turn the page.” With analysts estimating the Iraq war has cost the U.S. some $3 trillion in total, reduced troops and spending is at least good news for the federal budget. Though Obama couldn’t declare victory, he did give it a new name: Operation New Dawn.
7. College students - The ‘Dude, Where’s My Future?’ Award
And they thought finals were rough. College students got shafted this year as tuitions rose across the country and demand for their college skills plummeted. Thousands of students protested as university tuition increased as much as 32 percent in some states. College loan debt continues to grow — the average graduate now $24,000 in the red. For the first time, Americans owe more on their student loans than on their credit cards, and a recent report found that 17.4 million college grads work in low-skill jobs like waiters, janitors and cashiers — all of which don’t require a college degree. With prospects so bleak, it may help explain the strange emergence of the game of “Smirnoff icing” on campuses this year.
8. Greece - The Red Ink Award
In what started a domino effect for other debt-ridden European countries, Greece came dangerously close to collapse until the EU agreed to a $920 bailout plan in May. The Greek government’s long-time lavish entitlement spending ballooned the country’s deficit to 12.7 percent of GDP, putting it on the verge of default, and putting the country and the entire EU in crisis mode. Greece now has until 2014 to get their deficit down to 3 percent of GDP, a plan that will require unpopular tax hikes and social service cuts. Rioting citizens are opposing Greece’s austerity measures as the country emerges from 2010 looking like an accident victim — bandaged, but far from healed.
9. The Federal Deficit - It’s Not My Problem Award
What goes up and up and never seems to come down? U.S. federal spending. The nation’s deficit rose by $2 billion in FY 2010, and the current Congress has accumulated $3.22 trillion in new federal debt so far, bringing the total to $13,859 trillion. Balancing the federal budget is starting to look like a pipe dream, and many are fed up with politicians seemingly disregard for keeping spending in check. According to a recent CNN poll, 68 percent of Americans are very concerned about the deficit, the highest percent in the poll’s history. Obama has vowed to do something about it in 2011, since the past two years have mainly consisted of spending billions to stimulate the economy. It’s hard to imagine a well-run government, let alone a government with a balanced budget.
10. Toyota - The Full of Hot Air Bag Award
Just two short years ago, Toyota Motor Company assumed the title of the world's largest automaker, grabbing the moniker away from long-reigning General Motors. It also held the top spot for years for reliability. And last year, Toyota boasted $263 billion in sales, making it by far Japan's largest company. Then came the plunge. Sales began falling when consumer complaints about deadly defects in coolant pumps, brakes, accelerators and even floor mats surfaced, prompting the recall of over 10 million Toyota vehicles globally. From 2008 to the first quarter of 2010, Toyota’s stock price on the NYSE had fallen 22 percent, and continues to hover around the $78-a-share range. Among Forbes’ 10 worst-selling vehicles for 2010 were the Scion xD and Toyota Yaris. Spokesperson Steven Curtis said recently, "We recognize we've got some work to do in restoring the brand."