Some records are not meant to be broken.
Dan Marino’s 5,000-yard season; 54 wins by Red Sox pitcher Al Spalding in1875 season; Gretzky’s 92 goals in ‘82; the Big Dipper Wilt Chamberlain scoring 100 points for the Philadelphia Warriors in one game.
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Then there are the infamous records everyone wants to forget. Topping that list are most strikeouts in a single season by Barry Bonds’ father Bobby, at 189 – Barry and A-Rod are working on the all-steroids records. The dubious distinction of most fumbles, at 23 in a season, belongs to former New York Giants quarterback Kerry Collins; and Washington Senators outfielder Joe Sullivan banged his head on history by booting 106 fly balls during the summer of 1893.
Different Kinds of Negative Records
Much to the chagrin of the investment public, this year has seen several hall of fame economic records shattered that most of us would prefer remain untarnished.
The most Americans receiving unemployment benefits; it now has crested at 5 million.
We’ve seen the fastest rise and fall of oil in history; more than a $111 differential from its high in July to its low in January.
The dollar down 14 percent against 6 major world currencies in the past 12 months, to its lowest level since early the 1970s when the U.S. went off the gold standard.
Congress just passed, and Mr. Obama signed, the biggest spending bill by a new president ever, $800 billion and counting.
Can You Top This?
This morning, however, troubled insurance giant AIG may have set the bar beyond reach when it reported that it will lose more than $61 billion in a single quarter.
In response, for the first time this century, the Dow Jones Industrial Average broke 7000.
Even the ever ebullient Warren Buffet, in his annual letter to Berkshire-Hathaway investors, said the economy is in a “shambles.” Berkshire Hathaway Inc. retreated 5 percent after reporting the worst annual drop in book value since Buffett took control in 1965.
Market pessimism is reflected in everything from the precipitous declines in consumer spending to the sharp rise in savings as Americans hunker down for a long, cold economic winter. Shareholder negativity toward the future of the market is also mirrored in the doubling of the premiums being paid by option investors to protect against losses in U.S. stocks. With the market having already wiped out about $10.4 trillion in equity, contracts to protect against a decline in the Standard & Poor’s 500 Index for two years cost $15,160 on the Chicago Board Options Exchange at the end of last week, compared with $6,875 in 2007. The current level shows traders expect the benchmark gauge for U.S. equities to fluctuate twice as much in the next two years, as it has since 2000.
Sinking, Sinking Feeling
The S&P 500 has lost 53 percent since peaking in October 2007 while retreats in commodities and corporate bonds drove 920 hedge funds, or 9 percent of the total, out of business last year. On news that the U.S. government would step in with another $30 billion to keep AIG afloat, the company’s stock moved up about 14 percent, to a whopping 48 cents a share.
The first three bailouts of AIG were aimed at helping the insurance giant weather the economic downturn. This latest bailout seems to set the stage for a breakup of the 90-year-old firm.
So far, the price tag for the U.S. taxpayer bailout of AIG is a staggering $163 billion. In exchange for this additional taxpayer assistance, the government gets preferred AIG shares that pay a dividend.
Additionally, the government takes control of two AIG units that sell life insurance overseas, which the government can later sell.
The nice thing about records is that just when you think they’ll stand forever, someone comes along and breaks them.
How about the fastest turnaround in history? Now there’s a record we’d all like to see broken.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
