Extraordinary Numbers
There is an old Chinese curse: may you live in interesting times. This is certainly one of those times.
Everything about this financial crisis has been extraordinary. It didn't come out of the blue but it has been so much worse than even the most extreme pessimists predicted. It's too early to know how long this will last or how bad it will get. We know the effects will be pronounced for years even if the recession is short-lived.
Some of the most extraordinary numbers. Alan Greenspan said this is a once in a century financial crisis. Having been involved in economic affairs at the highest level for half a century, he should know.
Car sales for October were dreadful and the optimistic predictions for next year are for an annual rate of 12 million. The drop from last year is the worst in decades. Even when the economy went splat after 9/11, car sales hung in at a solid level.
Cars and housing normally lead the economy out of recession. Almost certainly, they won't this time. Housing is still declining rapidly, particularly in California, Florida and a handful of other states. Home values fell almost 10 percent in the third quarter, according to Zillow. Before the recent crisis, house values hadn't declined nationally since the Depression.
Peter Marcus, a steel analyst since 1961, said this week that the rate of decline in steel prices over the last four months was the biggest he's seen.Steel is a particularly economically sensitive product.
The decline in consumer spending for the Christmas season is projected to be the worst since 1942.
The stock market, as of today, is on pace for the worst annual decline since 1931.
Readings of investor fear and consumer confidence are close to record lows.
In short order one extraordinary event has followed another. In a single week, we had the complete reorganization of the investment banking firms, the failure of the largest insurer, the rescue of money market funds and the partial nationalization of a large part of our financial system. We also had the worst week in stock market history.
All of this is moving at such rapid speed and in such unusual direction that it would be folly to predict how this will unfold.