Day: November 20, 2008

We’re in unchartered water folks

The S&P 500 index fell by more than six percent Wednesday and Thursday. The last time it fell more than six percent on two consecutive days was July 20 and 21, 1933.

Eighteen trillion dollars of wealth has been lost in global equities in only seven weeks.

This week Citigroup’s already depressed shares have lost half their value, and shares of Bank of America and JPMorgan Chase are down 30 percent.

Target shares have lost more than half their value since Lehman failed, and that is much better than many of its competitors have done. Shares in Macy’s, Sears, Saks, Nordstrom, AnnTaylor and Dillard’s are down more than 70 percent as this holiday season approaches.

In late October, the Federal Reserve board staff concluded that the unemployment rate was likely to rise as high as 6.5 percent by the end of this year. A few days later, the Labor Department reported it was already there, with two months left to go.

P.S. As I’ve noted, I am a disaster junkie. I am also an obsessive — I wouldn’t have been doing a blog like this for more than five years if I weren’t. That said, I’m not trying to scare you any more than you might already be about the economy. I just find it fascinating in a train wreck kind of way.

Worst Crash Since Great Depression

With today’s big losses, the S&P 500 has dropped 51.9% since the Bull Market peak 58 weeks ago.

The 1929 crash was 47.9%.

The 1973-1974 oil crisis crash was 48.2%.

The 2000-2002 dot com crash was 49.1%.

Ultimately, after some recovery in 1930, the 1929-1932 Depression crash bottomed after two years, three months, down 89.2%.

Calculated Risk updated the chart.

Ouch!

Remember seven weeks ago when it got a splash that Warren Buffett (Berkshire Hathaway) was putting $5 billion into Goldman Sachs?

He’s lost half of it as of yesterday. Goldman Sachs is down more than 50% since he bought.

Update: Goldman Sachs closed around $125 on September 23rd. Today it closed at $52. That’s down 58%, a loss of $2.9 billion.

Best line by someone turning 61 today

“I like to say I only got drunk once — for thirty years.”

Joe Walsh, quoted in Rolling Stone : The Return of Joe Walsh, One of Rock’s Unsung Guitar Gods.

Walsh goes on to say “Coke really allowed me to focus, and alcohol took the edge off the cocaine.”

And that he always wanted to do an American Express commercial “in a completely trashed hotel room, with smoking embers and things sparking. And I’d go, ‘Hi, do you know who I am? I don’t have a clue.'”

Walsh joined The Eagles in 1976. The first album with Walsh in the band was Hotel California, which says all you ever need to know about both The Eagles and Joe Walsh.

November 20th

Today is the birthday

… of U.S. Senator Robert Byrd. The West Virginian is 91.

… of Nobel laureate Nadine Gordimer, “who through her magnificent epic writing has — in the words of Alfred Nobel — been of very great benefit to humanity.” She’s 85. The Writer’s Almanac has brief essays on Gordimer and Don DeLillo last year. He’s 72 today.

…of best supporting actress Oscar-winner Estelle Parsons. She won the award for “Bonnie and Clyde” and was nominated again the following year for “Rachel, Rachel.” She’s 81.

… of actor and “Family Feud” host Richard Dawson. He’s 76.

… of comedian Dick Smothers. The straight man of the duo is 70.

… of Vice President-elect Joe Biden. He’s 66.

… of Veronica Hamel of Hill Street Blues. She’s 65.

… of journalist Judy Woodruff. She’s 62.

… of Joe Walsh of The Eagles. He’s 61. Life’s been good to him so far.

I have a mansion forget the price
Ain’t never been there they tell me it’s nice
I live in hotels tear out the walls
I have accountants pay for it all

They say I’m crazy but I have a good time
I’m just looking for clues at the scene of the crime
Life’s been good to me so far

My Maserati does 185
I lost my license now I don’t drive
I have a limo ride in the back
I lock the doors in case I’m attacked

… of Richard Masur. He was the neighbor/boyfriend on On Day At a Time. He’s 60 today.

… of Bo Derek. She’s now five 10s and a 2.

… of Sean Young. Ms. Young won the Razzie for worst actress AND worst supporting actress for “A Kiss Before Dying” (she played twins). She’s been nominated for the award five other times. She’s 49.

… of hottie Nadine Velazquez of “My Name Is Earl.” She’s 30.

Robert F. Kennedy might have been 83 today. He was assassinated at age 42.

Astronomer Edwin Hubble was born on this date in 1889.

During the past 100 years, astronomers have discovered quasars, pulsars, black holes and planets orbiting distant suns. But all these pale next to the discoveries Edwin Hubble made in a few remarkable years in the 1920s. At the time, most of his colleagues believed the Milky Way galaxy, a swirling collection of stars a few hundred thousand light-years across, made up the entire cosmos. But peering deep into space from the chilly summit of Mount Wilson, in Southern California, Hubble realized that the Milky Way is just one of millions of galaxies that dot an incomparably larger setting.

Hubble went on to trump even that achievement by showing that this galaxy-studded cosmos is expanding — inflating majestically like an unimaginably gigantic balloon — a finding that prompted Albert Einstein to acknowledge and retract what he called “the greatest blunder of my life.” Hubble did nothing less, in short, than invent the idea of the universe and then provide the first evidence for the Big Bang theory, which describes the birth and evolution of the universe. He discovered the cosmos, and in doing so founded the science of cosmology.

Source: TIME 100: Edwin Hubble

Beggars Banquet

Timothy Egan takes yet another look at the bailouts and who gets rescued. Provocative.

You should read it all, but here’s some flavor:

Years ago, when a close friend of mine lost his 75-year-old family retail business in Pittsburgh with the collapse of the steel industry, the federal government was nowhere to lend a hand to small business owners.

When aluminum factories in Spokane, Wash., folded after a corporate raider picked them to the bone, destroying the best middle-class jobs for blue collar workers in the city where I grew up, the government’s advice to people losing their homes, cars and dignity was: Learn how to say, “You want fries with that?”

Best line of the day, so far

I understand the Federal Reserve Chairman Ben Bernanke is considered something of a sacred cow, our one point of light in an uncertain world. An academic who cannot be questioned by other academics. A smart person who has mastered the Great Depression and therefore “knows” what to do, and is providing the leadership to do it.

I am beginning to question all of these assumptions.

Economist Tim Duy