Dow 10K and the Lost Decade
EmailABC's Dan Arnall reports from New York: It happened today at 1:21pm ET. The numbers on the big board bloomed up to the five-digit range for at least a few minutes. Dow 10,000. Wow. It is, as many of you know, the second time that’s happened. The first time was more than a decade ago. March 1999 to be exact. Back then the economic world looked rosy. The nation was in the midst of its most impressive post-war expansion, spurred along by the revolution of the dot-com bubble. Back then, people thought we might all be millionaires someday thanks to the boom. But the planet has spun more than 3,800 times since that momentous inaugural 10K day and things have changed quite a bit. We’re now living in an economic world that is most certainly less optimistic than the one that greeted Dow 10K v.1.0. The young workers who founded and fueled the Internet revolution a decade ago are now grizzled veterans of the Great Recession. They’ve likely lost their jobs, or have spent the past year worrying about it. They’ve seen their parents’ retirement savings evaporate and many of them return to the workforce under duress. And the American home – once a symbol of ever expanding wealth – has now become a psychological burden that has pushed the American consumer out of the buying mood. While the media loves a Big Round Number and the folks at the New York Stock Exchange have even printed up Dow 10K v.2.0 baseball caps, take today’s “milestone” with a grain of salt. It could be that come October 2019, we’re right back here again, eyeing five digits and wondering how we’ll ever get out of this mess. Personally, I hope we’re celebrating Dow 15K a decade on thanks to 10 years of predictable 5% annual returns on the market. Slow and steady.
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Gee, wonder where all the right wingers who were in here posting about the DOW’s crash being a sign of Obama’s incompetence went? You know, the ones who had way too much fun with that ‘DOW is a daily tracking poll’ quip?
Posted by: jhw539 | October 14, 2009, 2:43 pm 2:43 pm
“Gee, wonder where all the right wingers who were in here posting about the DOW’s crash being a sign of Obama’s incompetence went?”
Why, they’re all enjoying Obama’s Hope and Change, of course! Let’s recap:
- Job loss continues and we have no positive job creation to lead us out of the recession.
- We will need positive job creation at record breaking levels for 60 months just to break even.
- The real economy is therefore not growing at all, but remains severely depressed.
- Retail sales are down year over year. The consumer is not coming back any time soon.
- Credit to small business shrunk by 25% since last year.
- New business startups are down 14%
- Credit has contracted by $1.25 trillion in the last 24 months.
- 10% of all credit card accounts have been canceled.
- Excess capacity in manufacturing is now over 60%
- Shipping is idled all over the world with indexes at all time lows.
- Production is down in double digit numbers in all the world’s major manufacturing sectors.
- 32% of mortgaged U.S. housing is now “underwater.”
- In states like CA, FL, AZ, NV as many as 75% of housing is “underwater.”
- More than half a million house owners simply defaulted and walked away last year.
- There are 3.6 million unsold homes and another 7 million foreclosures held off market.
- There is now a 25 month supply of unsold homes in the U.S.
- The US housing market is NOT recovering. Prices are continuing to erode.
- 7 million foreclosures are being held off the market by banks. When they hit the market prices will fall again.
- $685 Billion in new mortgages were issued this year thru August. (Now look at the next point)
- The Fed bought $722 billion in mortgage paper thru August—in effect it backstops the whole RE market!
- Loan default rates at banks have reached an average of 14%
- Loan losses in the commercial sector are just getting started.
- Alt-A and Option ARM loans are facing a huge wave of problems as loans reset to higher payments.
- Delinquency rates are now at all time highs, and getting worse each month.
- New car sales fell 36% in September after “Cash For Clunkers” expired.
- Credit card default/delinquency rates exceed 10%
- More credit line cuts are on the way as banks get ready for new regulations.
- Personal bankruptcy filings exceeded 1.4 million in the first 9 months of 2009.
- September ‘09 bankruptcy filings were 41% higher than those in Sept ‘08.
- Debt remain catastrophically high at every level of our society—Government, States, Cities, Banks, Families and Individuals.
Posted by: Here's Your Change | October 15, 2009, 9:16 pm 9:16 pm