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Senior Features Editor
Freddie Mac [FRE
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CNBC.com |
It was the domino theory at work in high finance.
And the smartest guys in the room were defenseless.
No matter how hard people may have prayed, we could not forgive our debts or our debtors.
For all the technology of the system and complexity of the products, the financial crisis of 2008 had more in common with the periodic financial panics of the 19th century than the stock market crash of 1987, the only reference point for most players and analysts.
The crisis moved at warp speed, spread like a brush fire and lingered like flood waters.
No one called it a perfect storm, but in the end it might very well have been just that.
Of course, storms do not come out of nowhere and without warning; we usually see them coming--even this one.
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Those dog days of August—more than half a year before the 11th-hour rescue of Bear Stearns first shocked the markets—did not make fear a fixture in the market pysche but they marked the end of the boom and the beginning of the end of the bull market.
On August 8, 2007, the Dow Industrials closed at 13,657--then a record high. A week later the blue-chip index was down to 12,845.
Soon thereafter, the Fed's FOMC chose not to cut interest rates and thereby began both the second guessing of the government's assessment of the crisis and a wave of dramatic and unusual policy responses to it.
The stock market made one last run, with the Dow peaking at 14,164.53 on Oct. 9; it was virtually all downhill for both the economy and stocks from there.
Much has changed in those two years, which has been a period of widespread extremes. That's more than evident in the following measures, which show the highs and lows, or best and worst, data points along the way.
Key Data Points: Then & Now |
| Growth | ||
| GDP | $14.55 T (Q3 ‘08) | $14.15 T(Q2 ‘09) |
| ISM Index | 50.8 (Jan. ‘08) | 32.9% (Dec. ‘08) |
| CPI (yoy) | 5.6% (July ‘08) | -0.5% (June ‘09) |
| Auto Sales (Units) | 16.3 M (Aug. ‘07) | 9.17 M (Feb. ‘09) |
| Retail Sales | $3.43 T (Nov. ’08) | $3.00 T (April ’09) |
| Jobless Rate | 4.7% (Aug., Nov ‘07) | 9.5% (Jun. 07) |
| Employed | 146.7 M (Nov. ‘07) | 140.0 M (July ‘09) |
| Corporate Profits | $1.35 T (Q4 ’07) | $976.1 B (Q1 ’09) |
| Durable Goods Orders | $224.13 B (Dec. '07) | $158.44 B (March ’09) |
| Industrial Production | 114.4 (Oct. ‘07) | 95.4 (Jun. 09) |
| Consumers | ||
| Consumer Confidence | 105.6 (Aug ‘07) | 25.3 (Feb. ‘09) |
| Consumer Credit | $2.58 T (Q3 ‘08) | $2.50 T (Jun. ‘09) |
| Household Net Wealth | $58.6 T (Q3 ‘07) | $50.4 T (Q1 ‘09) |
| Housing | ||
| Existing Home Sales (Units) | 5.65 M (‘07) | 4.67 M (‘09 Avg.) |
| Median Existing Home Price | $219,000 (’07) | $171,000 (2009 H1) |
| New Home Sales (Units) | 795,000 (‘07) | 309,000 (Jan. '09) |
| Median New Home Price | $225,700 (Aug. ‘07) | $200,900 (Jan. ‘09) |
| Foreclosure Rate | 1 in 617 (Nov. ’07) | 1 in 355 (July ‘09) |
| Residential Housing Starts (Units) | 1.33 M (Aug 07) | .458 M (April’ 09) |
| Interest Rates | ||
| Fed Funds Rate | 5.25% (Aug ‘07) | 0-0.25% (current) |
| Prime Lending Rate | 8.25% (Aug. ’07) | 3.25% (current) |
| One-Year ARM | 6.22% (Aug '07) | 4.85% (July’ 09) |
| 15-Year Fixed Mortgage | 6.59% (Aug. '07) | 5.11% (May ‘09) |
| 30-Year Fixed Mortgage | 6.96% (Aug. ‘07) | 5.48% (April '09) |
| Ten-Year Note | 4.86% (Aug ‘07) | 2.07% (Dec 08) |
| Two-Year Note | 4.66% (Aug. ‘07) | 0.59% (Dec. ’08) |
| Markets | ||
| Dow Industrials | 14,164.53 (Oct. '07) | 6594.44 (Mar ‘09) |
| Crude Oil | $147.27 (July ’08) | $33.20 (Jan.’ 09) |
| Gold | $651.60 (Aug. ‘07) | $1033.90 (March ’08) |
| Corn (Bushel) | $7.96 (June ’08) | $3.06 (Dec. 08) |
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Data is a real-time snapshot *Data is delayed at least 15 minutes