Facts That Make A Difference
1. WORSE THAN - From the S&P 500’s all-time closing high set on 10/09/07 (1565) to last week’s low close on Friday 3/6/09 (683), the index has fallen 56%, a tumble greater than the 49% loss sustained during the bear market of 2000-02 or the 48% loss that occurred in 1973-74 (source: Standard & Poor’s).
2. BELOW WATER - 30% of US homeowners surveyed within the last month that have mortgage debt on their residence believe their outstanding debt exceeds the current fair market value of their home (source: Pew Research).
3. ECONOMIC ILLS - The size of the US economy (as measured by the GDP) fell by 6.2% in the 4th quarter 2008 (i.e., quarter-over-quarter change expressed as an annualized result), its worst quarterly change since the 1st quarter 1982. There have been only 3 worst performing quarters in the last 60 years. Gross Domestic Product (GDP) is the annual market value of all goods and services produced domestically by the US (source: Commerce Department).
4. HOW BAD ARE THEY? - Collateralized debt obligations (CDOs) are investments that are composed of many different asset-backed securities (ABS). Each ABS is an individual bond made up of a pool of assets, e.g., mortgages, auto loans, student loans or credit card loans). 48% of all CDOs (by volume) issued since 2002 have defaulted (source: Wachovia, Financial Times).
5. DON’T FORGET THE STATES - Only 5 of the 50 US states are projecting a balanced budget for the current 2009 fiscal year and for next year’s 2010 fiscal year. The 5 states are Arkansas, Montana, North Dakota, West Virginia and Wyoming (source: Tax Foundation).
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