The Mess on Wall Street: $4 Trillion Down the Drain

October 7, 2007

September 12, 2008

(Click on charts to enlarge)

The collapse of so many major financial institutions in the past year, and over the past few days especially, is hard to fathom in its enormity. Sometimes you need a good visual to put things in perspective. The New York Times has an interactive graphic up on its site that pretty much says it all. It shows that $4 trillion has been wiped off the total market capitalization of the U.S. stock market since last October. Of that, nearly $1 trillion is from the decline in the financial sector alone.

Each box in the graphic is proportional to the size of the market capitalization of the biggest financial firms then and now. As you mouse over the squares, you can see how much value each company lost between October 9, 2007 and September 12, 2008. Here are some of the individual losses by market cap:

Citigroup: $236.7 billion to $97.8 billion.
Bank of America: $236.5 billion to $150.2 billion.
AIG: $179.8 billion to $32.3 billion
Goldman Sachs: $97.7 billion to $61.3 billion
American Express: $74.8 billion to $45 billion.
Morgan Stanley: $73.1 billion to $41.1 billion.
Fannie Mae: $64.8 billion to $700 million.
Merrill Lynch: $63.9 billion to $24.2 billion
Freddie Mac: $41.5 billion to $300 million.
Lehman Brothers: $34.4 billion to $2.5 billion.
Washington Mutual: $31.1 billion to $2.9 billion

It is staggering when you look at it all together, and when you realize that the companies still standing, like Bank of America (BAC) and Citigroup (C), have seen bigger market cap declines than some of the institutions that have gone under (Lehman Brothers) or that had to be bailed out (Fannie Mae, Freddie Mac).

Original post

Comments

[fatcat:]

Erick,this is worse than I thought...and it has not worked thru the system yet...

2008 Sep 16 10:52 PM

[fatcat:]

Worse than I thought....take off 50% for housing inflation that extrapolates to all prices..its still bad..

2008 Sep 16 10:58 PM

[Rafael Grillo:]

And yet, at the end of all this mess, there will be a few winners that will take it all. I am particualrly interested in Bank of America. They are taking some gutsy risks, but if they pay off -and I think they will-, BAC will come out of this turmoil as a financial power house. Some people have said they are reckless; I think they are being cleverly aggressive.

2008 Sep 16 11:06 PM

[js_mcknz:]

cleverly agressive...until they find where Merrill and Countrywide buried all the bodies.

2008 Sep 16 11:19 PM

[NObama:]

We can blame all this mess on Mr Greenspan himself. Naked shorting will lead more financials to their graves.

2008 Sep 16 11:32 PM

[shouldibuyit:]

Washington Mutual?? 29 Billion or 2.9 billion which is it.

2008 Sep 17 12:41 AM

[Undecided:]

I think Greenspan is only part of the problem. I caught an article today that actually referenced back to an article from the Washington Post back in 2005. It seems to bring a heck of a lot of clarity to the GSE mess and who attempted to reform it and who would not. While the GSE isn't the only problem, their unwillingness to reform left the door open to recklessness behavior by others.

www.courant.com/news/o...

2008 Sep 17 12:45 AM

[NObama:]

Lets see, Greenspan POPPED the Internet Bubble on purpose by raising interest rate when there clearly was no inflation. This led to the tech crash & subsequent interest cuts to almost 0%. He kept interest rate low too long & encouraged the housing bubble to bail him out of the mess he caused. He should have called for toughening of the lending guidelines when he testified before Congress but didn't. Greenspan & Congress are prime suspects in the mess that we are in.

Cox at the SEC is another academia with no clues what so ever. They need to make a move now to ban naked shorting to put a floor under the financials.

2008 Sep 17 12:55 AM

[Steven Hansen:]

great post. your graphics are worth 1 trillion words.

2008 Sep 17 12:58 AM

[gashouse go...:]

I wish people wouldn't bash academics. When academics are chosen for leading positions in government, it's often on the basis of their willingness to do the politician's bidding. People chosen for those roles aren't necessarily "scholars seeking the truth no matter where it brings them".

Just like scientists who, in order to pay the mortgage, follow the orders of the MBA's who pay them.

2008 Sep 17 02:05 AM

[BxCapricorn:]

Shouldibuyit...since you are unable to do this yourself, you go to Yahoo! and enter the symbol. They choose "key statistics". Oh, lookey here! It say WM is worth 3.94B.

finance.yahoo.com/q/ks...

To all those that worry about the people (government) taking back their property (stocks, bonds, etc.) I can only ask "why"? The machine failed and you're getting back your assets for pennies on the dollar, without a revolution. If AIG, WM, BSC, LEH, FNM, FRE, MER, and others had stayed private, you would have had......what? Now you own them, for next to nothing, and the only thing you did not get was MER, and BAC stepped up and did the "blue blood" thing, and overpaid. We'll look back on this, ten years from now, over a burger, the five dollar one, not the $15 dolllar one, and laugh, laugh, laugh.

2008 Sep 17 02:27 AM

[Kint:]

Let's not scapegoat - the real culprits were the CEOs and senior management of these companies who let greed blind them to make irresponsible decisions..

2008 Sep 17 02:57 AM

[peterthepai...:]

...ANTI-MONEY has been canceling out all the PONZI-MONEY ever since the DOLLAR COLLIDER caused a DELEVERAGING BLACK HOLE that has sucked liquidity out of the ecomomy and caused an alleged RECESSION...

2008 Sep 17 06:31 AM

[Roger Knights:]

"the real culprits were the CEOs and senior management of these companies who let greed blind them to make irresponsible decisions." -- Kint

And let's not forget the yes-men and cronies on the boards of those companies who were afraid to ask the CEOs hard questions and refuse to be satisfied with spun cotton-candy answers. Why didn't someone like John Akers, for instance, tell "the gorilla" to go climb a vine when he insisted on an unachievable price for Lehmans?

2008 Sep 17 08:35 AM

[Umm, yeah:]

Well, let me add: Don't forget to mention that the CEOs and senior management of these companies made millions of dollars of profits/bonuses/salary over the past few years, and even if they don't get golden parachutes, they've already made their money.

2008 Sep 17 10:22 AM

[Ted Buila:]

You can be sure that cheshire-jovial Warren Buffett has had his fingerprints all over the AIG sub-prime business for the past 5-10 years.

2008 Sep 17 01:14 PM

[BxCapricorn:]

Your graphic had Citigroup by mistake...oh, rats, I gave that one away too. Time travel can be quite confusing. I thought this was mid-October.

2008 Sep 18 04:03 AM

[J-Texas-1:]

Simple history repeating itself.

1) Enron accounting
2) Tolerated by lax GAAP rules
3) Violating unenforced regulations
4) Fraudulently and deceptively hyper-inflating company "values"
5) Paying hundreds of millions in bonuses and salaries
6) Saved by hypnotized Americans watching "reality" TV
7) Watching executives retire to their tropical islands with their fortunes in tact.

It's the perfect scam if you're the artist or at least have a bit part.

To paraphrase the old, popular movie line... "I see stupid people. They're everywhere." Or "I see thieves..." Take your pick. Or take them both.

2008 Sep 18 06:48 AM