General Motors
With a range of underperforming car brands like Hummer, Pontiac and Saab, an aging work force and problems with its unions, General Motors was already struggling before the clouds of economic uncertainty loomed. It was therefore not a huge surprise to see the company declare bankruptcy in June 2009. Diluted earnings per share, which stood at 68.45 USD for the 2007 financial year, are now completely worthless, as the company has been delisted from the New York Stock Exchange.
Price of 10,000 shares in GM in 2007 = 684,500 USD
Price of 10,000 shares in GM in 2010 = 0 USD
Loss of 684,500 USD (100 per cent)
Lehman Brothers
One of the major casualties during the early months of the U.S. recession was Lehman Brothers, America’s fourth largest investment bank. In September 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The filing marked the largest bankruptcy in U.S. history. Having reported 1.54 USD earnings per share for Q4, 2007, Lehman’s stock is now virtually worthless.
Price of 10,000 LEHMQ shares in 2007 = 680,000 USD
Price of 10,000 LEHMQ shares in 2010 = 700 USD
Loss of 679,300 USD (99.9 per cent)
AIG
American International Group, Inc. (AIG) is a U.S. insurance giant whose shares were worth around 767 USD just before summer 2008. In September of that year AIG suffered from a liquidity crisis when its credit ratings were downgraded to below AA levels, and ever since the Federal Reserve Bank has been bailing out the giant to the tune of over 185 billion USD. On July 16 this year, the share price was a measly 35.64 USD, which represents a disastrous return for any investor.
Price of 10,000 shares of AIG in 2007 = 7,670,000 USD
Price of 10,000 shares of AIG in 2010 = 356,400 USD
Loss of 7,313,600 USD (95 per cent)
International Airlines
A seemingly cursed industry, aviation has suffered one catastrophe after another. Passenger numbers hit the floor following the 9/11 terrorist attacks, while the SARS outbreak and international disputes have also disrupted global carriers. More recently, rocketing fuel prices to nearly 150 USD per barrel in the summer of 2008 almost crippled the industry. Carriers that were used to paying around 70-80 USD for every barrel were suddenly shelling out double that amount.
Price of 10,000 AMR Corp (American Airlines parent company) in 2007 = 322,600 USD
Price of 10,000 AMR Corp (American Airlines parent company) in 2010 = 67,400 USD
Loss of 255,200 USD (80 per cent)
DP World
DP World is a major operator of marine ports with 49 terminals in operation and a further 12 under development handling 46.8 million containers in 2008. It has over 30,000 employees across 31 countries and these figures are expected to double in the next ten years. When the company IPO’d on the Nasdaq Dubai exchange in November 2007, its shares were worth 1.30 USD, giving it a 21.6bn USD valuation. Now that figure has plummeted to 7.64bn USD with shares standing at around 0.46 USD in late June.
Price of 10,000 shares in DP World in 2007 = 13,000 USD
Price of 10,000 shares in DP World in 2010 = 4,600 USD
Loss of 8,400 USD (65 per cent)
Dubai Realty
Few Dubai-based investments seemed to have nosedived more dramatically than real estate. During the boom years before the financial meltdown in late 2008, residential property was going for 1,580 AED per square foot (4,630 USD per m2). Today, the cheapest villas in the emirate’s Green Community district are available for less than half of that at 700 AED per square foot (2,050 USD per m2). That’s great if you’re looking for a place now, but less so for those who bought as the market peaked.
Price of 900m2 villa in 2007 = 4,167,000 USD
Price of 900m2 villa in 2010 = 1,845,000 USD
Loss of 2,322,000 USD (55 per cent)
Bernard Madoff
Thousands of speculators were duped into an astoundingly audacious Ponzi investment scheme dating back to the 1980s. The man responsible was Bernard Madoff, a Wall Street financier who was sentenced to 150 years in jail after admitting 11 charges relating to an estimated 65 billion USD fortune that he defrauded from clients. While not directly linked to the downturn, the episode has nevertheless cost his unsuspecting international investors billions of dollars.
Price of investing 1m USD with Bernard L. Madoff Investment Securities in 2007 = 1,000,000 USD
Price of investing 1m USD with Bernard L. Madoff Investment Securities in 2010 = 500,000 USD
Loss of 500,000 USD (50 per cent)
Getting Divorced
According to experts, the harsh economic conditions are putting untold additional strains on couples who are being stretched to breaking point. Spouses with money are keen to sort out a deal while the value of their assets is low and those without any are concerned about missing out if their partners assets drop any further in value. While figures relating to the Middle East are impossible to come by, according to the Telegraph newspaper in England, divorces are up 50 per cent in the UK and the U.S.
Net worth while still married in 2007 = 3,000,000 USD
Net worth after a divorce in 2010 = 1,500,000 USD
Loss 1,500,000 USD (50 per cent)
Oil
The price of oil, like all commodities, is subject to major swings over time, being particularly tied to the overall business cycle. 2008 was the boom time to invest in oil when the price per barrel was skyrocketing, eventually peaking at 145 USD in July of that year. Huge demand forced up prices, which meant lucrative returns for investors that already owned stock. But with the price now hovering around the 77 USD market, the potential to turn a tidy profit is significantly less.
Price of 1,000 barrels of oil in 2008 = 145,000 USD
Price of 1,000 barrels of oil in 2010 = 77,000 USD
Loss of 68,000 USD (47 per cent)
Mashreq Bank Mortgages
Some expatriates in Dubai have filed lawsuits against Mashreq Bank for allegedly increasing their mortgage repayments. In a UAE newspaper, one said the interest on his monthly installments had risen from 4,083 to 4,900 USD since 2008 after the bank introduced its own formula to calculate customers’ mortgage repayments. The customers argue that the ‘unfair’ interest rise is another kick in the teeth after seeing the value of their properties drop amid the downturn. Mashreq Bank has denied any wrongdoing.
Price of mortgage payment in 2007 = 4,083 USD
Price of mortgage payment in 2010 = 4,900 USD
Loss of 817 USD every month (20 per cent)
GCC Sportscars
Highways throughout the GCC are known to sport some of the world’s biggest and fanciest cars. From Aston Martins and Ferraris to Hummers and Bentleys, you’ll find most high-end car brands tearing through the Gulf states. While often cheaper to buy in this region than Europe or US, new car prices dropped further still because of the downturn. A Porsche 911 that cost 122,900 USD three years ago, now sells for 114,350 USD. Similarly, the Cayman and Boxster models have also become cheaper.
Price of new GCC Porsche Cayman in 2007 = 54,000 USD
Price of new GCC Porsche Cayman in 2010 = 44,900 USD
Loss of 9,000 (17 per cent)
