Top 10 Records Set in 2008

Top 10 Records Set in 2008

Setting records can be a good thing or a bad thing, it depends on the record. As you might have guessed, this is a list of the not-so-nice records of 2008.

1. $30 trillion in market valuation losses. This is a very big and painful number. For the U.S. it comes at a time when baby boomers are getting ready to retire, so the timing is terrible (as if there ever is a good time for this to happen). While some of this will eventually reverse itself once the recession ends, it could take well over a decade for valuations to return overall, and certainly for many companies they never will.

2. $50 billion Ponzi scheme. The biggest and perhaps longest running Ponzi scheme, engineered by Madoff, has come to an end, and the impacts are far and wide. This one does not even have three degrees of separation from Kevin Bacon.

3. Highest number of foreclosures ever. I hope 2008 will be the peak, but expect foreclosure activity to be high throughout 2009 and into 2010. They will be shifting from subprime to Alt-A and prime, but they will continue as housing prices decline, jobless claims rise and credit remains tight.

4. Record 18% decline in home prices. It is what it is, though this is through October, so it may not be a record for the calendar year once we know the year-end data. Still bad by any standard.

5. $700+ billion in financial company write-downs and still counting. Most have predicted this will eventually exceed a trillion and some say two trillion. A trillion here and a trillion there and this starts to add up to some big money.

6. Largest bankruptcy ever. Lehman Brothers bankruptcy filing, with $613 billion in debt, was the largest ever. The 158-year-old-firm had survived the Great Depression but it could not survive 40+-to-1 debt to capital ratios.

7. Record redemptions from hedge funds. Not a biggie here except that this will impact stock prices as hedge funds have to liquidate further next year.

8. Record Oil Prices and Record Decline. Oil hit $147 a barrel earlier this year only to be followed by its biggest price drop ever. Kinda like following the bouncing ball.

9. Largest nationalization. The U.S. increased its debt load by about $5 trillion when it nationalized Fannie Mae and Freddie Mac. The irony of the bastion of capitalism doing the largest nationalization ever is not lost on the taxpayers.

10. Three-month Treasury yields below 0%. Not even during the Great Depression did rates go this low. We are effectively paying the government to keep our money. Now that spells panic.

There you have it. Not a pretty picture. For those interested, here is a nice piece by Fortune on the 21 Dumbest Moments in Business for 2008.

Disclosures: None.

Comments

[hy is the s...:]

a record number of bs stories at johnny's,

Jan 01 08:18 AM

[Joyful Alte...:]

Sorry, the Fortune link doesn't work. And as one who created some dumb moments last year, I'm really curious to see how the goofs were winnowed down to so few.

Jan 01 10:30 AM

[granger:]

This means to me Buy. The epitome of negative news flow to the extreme.

Started a little too early, in September/October, but am the most aggressively positioned in equities since the summer of 2006.

Not sure what the next 2-3 years bring, but 10years from now, I will be happy.

Jan 02 07:03 AM

[Craig Brown:]

Granger, if you have a very long term horizon, I think you will do well. What you would be wise to consider at the moment it the Japanese market today versus like 1990 and the Nasdaq versus say 2001. The Nikkei is roughly a fourth of where it was 18 years ago and the Nasdaq is roughly a third of where it was eight years ago. So yes, markets can go down drastically and stay there for a very long time after a bubble. You decide.

Jan 02 03:22 PM