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To: mishedlo who wrote (10141)	3/21/2001 8:19:27 AM
From: Poet	Respond to of 10876

You were a busy guy yesterday, Mish! I pulled this post out of the pile of the pile of 300 made on the CFZ last night. Some very interesting and frightening statistics on the current crash: To:Lucretius who started this subject From: Just_Observing Tuesday, Mar 20, 2001 7:17 PM View Replies (2) \| Respond to of 83292 Some Perspectives on the Stock Market Crash The combined losses on the NASDAQ and the New York Stock Exchange topped $4.6 trillion by the end of the week (March 16), nearly five times the losses from the October 1987 Wall Street crash. The NASDAQ by itself has fallen from $6.7 trillion in March 2000 to $2.7 trillion. The sheer magnitude of this decline is staggering. The $4.6 trillion in losses is: * Greater than the entire publicly held federal debt * More than the combined Social Security and Medicare trust funds * The equivalent of the world losing the economies of Japan and South Korea * The equivalent of the United States scrapping its auto, steel, electrical machinery and oil industries, all at once The equivalent of the loss of the entire housing stock of the United States * Two to three times the total value of Bush's proposed ten-year tax cut * 1,000 times the amount that Bush would cut taxes this year, in the name of providing a stimulus to the economy and offsetting the threat of a recession _______________ Another analysis, published in the New York Times March 18, gauged the high-tech collapse by calculating how long it would take selected stocks to regain their peak prices if they enjoyed annual increases of 15 percent—well above traditional rates of return. By this measure, Intel would take seven years to regain its top price, Cisco Systems would require 10 years, Microsoft six years, Oracle and Sun Microsystems nine years and Yahoo! no less than 20 years. ______________________ Consumer debt has doubled since 1990, to $7.5 trillion—more than $50,000 per household, over $25,000 for every man, woman and child in America. Much of this has involved homeowners taking out home equity loans to finance consumption, pay other debts, or gamble in the stock market. In 1982 homeowners owed lenders 30 percent of the market value of their residences. By 1999 this figure was up to 46 percent. During the 1990s, the ratio of household debt, including mortgages, to disposable income rose by almost 25 percent. The average American family now has debts that exceed its average after-tax income. This debt is unequally distributed—in a manner diametrically opposite the distribution of wealth. The top ten percent of the population own over 70 percent of the national wealth, while the bottom 90 percent of the population, with less than 30 percent of the wealth, owe 70 percent of the consumer debt. In corporate America as well, the 1990s has been an era of growing debt—topping $10.6 trillion by the end of 1999. By and large, companies have been unwilling or unable to finance expansion and new investment by issuing new stock, for fear that this would dilute the holdings of shareholders and cause a decline in the price. Rather, corporations have gone into debt, even borrowing money on the financial markets to buy up their own stock and boost its price. The result is that instead of the traditional trade-off of equity and debt, with debt decreasing during a boom and swelling during a downturn, most companies have seen their debts increase during the stock market boom. The present financial crisis, let alone any severe and prolonged recession, will mean corporate bankruptcies on a vast scale—with predictable effects on jobs, benefits, pensions and living standards generally. Note that the numbers have not been updated to include today's losses. wsws.org