Comparing the 2008 Credit Crisis to Today

Our financial system almost imploded back on September 29, 2008 as even said by then Fed Chairman Ben Bernanke at a Congressional subcommittee hearing several months later. At the time on September 29th in 2008, the Dow Jones index dropped a then all-time record -777 (unlucky jackpot) points. Six months later on March 9, 2009, the Dow Jones index hit a shockingly low market bottom of 6,547 as compared to more than 35,000 points in early August 2023.

In January 2009, an estimated 69.5% of all California home sales were considered to be distressed (foreclosures, loan modifications, forbearance, short sales, deed-in-lieu of foreclosure, bank-owned REOs, etc.). What percentage of home sales do you think will be distressed in the near future after home listing inventory levels rise again? All truth is just based upon personal perspectives, so your thoughts matter just like everything else's beliefs.

In recent years, a -777 point loss isn't that big of deal as compared to the Top 10 worst Dow Jones index days in recent years:

Four of the all-time Top 8 (50%) worst Dow Jones point loss days were in February of 2018 or 2020. Six of the all-time worst Top 10 Dow Jones point loss days ever were in March 2020. So, the Top 10 all-time Dow Jones point loss days ever took place in February or March.

Month & Year / Daily Point Loss
#1: 03/16/2020 / -2997
#2: 03/12/2020 / -2353
#3: 03/09/2020 / -2014
#4: 03/11/2020 / -1465
#5: 02/27/2020 / -1191
#6: 02/05/2018 / -1175
#7: 02/08/2018 / -1033
#8: 02/24/2020 / -1032
#9: 03/05/2020 / -970
#10: 03/27/2020 / -915
Source: Standard and Poor's (through 03/27/2020)

2023 vs. 2008: Which year ends up more chaotic?

We’re now eight months into 2023. None of us have a crystal ball and can accurately forecast what may happen in the third or fourth quarters of 2023. Will the financial markets and asset prices start to stabilize or move higher as rates either stabilize or fall? Or will we see an increasing number of financial institutions go out of business and asset prices come crashing down? Either way with a boom or bust cycle, there’s opportunity for investors who are prepared and ready to take action.

Will 2023 later be remembered as being the start of the next financial crisis or will we see the “soft landing” that Jerome Powell has been aiming for?

In 2008, the Credit Crisis default risks became more readily apparent as these financial institutions and government entities collapsed or were bailed out:

• Bear Stearns (the fifth largest investment firm in the world at the time)
• Lehman Brothers (the biggest bankruptcy ever involving $600 billion)
• Washington Mutual (WAMU – #1 bank collapse ever with $328 billion in assets)
• FDIC (silently bailed out after WAMU)
• Countrywide Mortgage (once America’s largest mortgage lender)
• Downey Savings
• World Savings
• IndyMac
• American International Group (AIG – the world’s largest insurance company)
• Merrill Lynch (the world’s largest stock brokerage firm)

Some of the financial market Madness of March 2023:

• Stock markets lost $2 trillion in five days.
• The cryptocurrency market lost $100 billion in two days.
• U.S. banks lost $100 billion in stock value in two days.
• Silicon Valley Bank failed with more than $200 billion in deposits in just 24 hours.

Between 1980, when the US Prime Rate for the most creditworthy borrowers peaked at 21.5% by December 1980, and 1995, more than 1,600 banks, thrifts, or savings and loans either collapsed or received government financial bailout funds. By comparison, there have only been two U.S. financial institutions (Silicon Valley Bank and Signature Bank) in 2023 that have collapsed so far.
From my article: The Madness of March 2023

To honor this September 29th date which essentially changed our financial systems forever, we will also meet on Friday, September 29th here in 2023 at the Canyon Lake Golf & Country Club on the patio near the bar at 5 pm. Our official topic point summary coverage that will be handed out to every attendee will begin at 5:30 pm to give you enough time to make it to the event.

Here are the notes from our most recent August 8th meeting that were shared in at least seven national publications:
Top 10 Housing, Financial, and Government Trends

Please bring any potential buyers, sellers, or deals with you to the gathering. We hope to see you there!

Rick Tobin
www.socalrealestateclub.com
www.realloans.com
Please join our new Facebook group page linked here: Learn Real Estate
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