Stock Market Volatility is Back: Approaching a Decade of Lost Returns on Investments. The S&P 500 can fall another 42%.
The stock market is off to a horrible start for 2009. Many thought that things could not get worse than what we experienced in 2008. Yet market volatility, a sign of an unhealthy economy, is still with us and appearing again in a ferocious way. From January 4, 2008 to February 21, 2008 the S&P 500 was off by -9.2%. The S&P 500 during that same time for 2009 is now off by -14.75%. The issues we will now face are a continuing stream of declining earnings because of the pullback in consumption and the tightening up of the credit markets. It also doesn’t help that consumers are psychologically more cautious because of what is going on.
Homeowner Affordability and Stability Plan: California and Florida you are Financially on Your Own.
I was cautious about the details in the new Homeowner Affordability and Stability Plan which was announced on Wednesday. It is going to use $75 billion from the additional $350 billion in TARP funds while accessing the $200 billion in backstops to Fannie Mae and Freddie Mac. Yet one key point, and probably a reason the market ended neutral on Wednesday, is that the plan inches closer at isolating the toxic mortgage waste found in California, Florida, Nevada, and Arizona. In the mean time, it would also seem that California is still unable to have any effective government and is embarrassing itself on the world stage. One of the largest economies in the world and you have politicians brushing their teeth in the halls of Sacramento.
Suburb Cat Thousandaire: How Americans Lost a Decade of Wealth through Debt and Listening to the Banking and Housing Industry.
Not all that glitters is gold. And not everyone touting to be a financial expert should be regarded as such. Americans have lived in what could be considered a decade built on a debt façade. As many Americans strolled their neighborhoods, possibly taking the dog out for a walk, many suddenly would come across a neighbor with a new sleek silver Mercedes Benz or other foreign car. Many thought, “how could it be that they now have the means to afford a $100,000 car?” At this point, many could have resisted the siren call but many actually mistook debt for wealth and went out and went into debt to also get a luxury car. This story replayed itself many times over especially with the allure of the 3 decade long housing bubble.
Monthly Foreclosures and the Dreaded Road Ahead: On Path to another 3,000,000+ Foreclosures for 2009. 1 out of Every 173 Homes Received a Foreclosure Filing in California. 8,800 Foreclosure Filings a Day in the United States.
Foreclosures filings in past economic downturns were usually driven by job losses or contractions in the economy. In our current recession we had an interesting dynamic in that many foreclosures were caused by the actual mortgages given to borrowers. This of course spurred the housing bubble but more importantly, positioned a double whammy for our nation. First, problems started showing up in subprime mortgages followed by Alt-A and Option ARMs and now prime mortgages which then fed into an economy highly built on the real estate and finance sectors and now we are seeing foreclosures for more typical reasons like job losses.