NEW YORK (AP) -- There is terror in those stock market numbers. Anyone who has ever received a margin call knows all about it. They might try to tell you about it, but they'll probably end up stuttering instead.
Terror visited many families during the past few months, especially those who rolled the dice on a high tech-stock that burned out like a spent rocket. And very especially those who borrowed to invest.
It's more common than the traditional statistics tell you. Margin debt, or money borrowed from stockbrokers, is one of the traditional measurements of market debt. But money borrowed from home equity isn't.
We have a good idea how much money has been borrowed from brokers -- a grand total of $250.78 billion from New York Stock Exchange member firms as of September -- but only a guesstimate about home equity loans.
This is unsettling enough, but then you have to wonder how many families took a flyer on the market because they didn't have any savings but did have a big college tuition bill looming in the future.
Millions of families have no savings. In fact, Federal Reserve figures show that in 1998 something like 13 percent of households had no bank account at all. However, they do have debts. Almost anyone can borrow today, which helps explain why the household savings rate is near zero.
OK, some of these families do save in their own way. They invest in stocks, a particularly popular pastime over the past decade, when so many stocks made their investors rich. The savings rate excludes capital gains.
Capital gains are what every household has been counting during the market's long ascent. But capital gains aren't realized until stocks are sold. And many families, expecting even bigger gains, failed to sell.
In short, when certain stocks fall 50 percent or 80 percent, as many have, the owners must send more cash to their brokers. But, having minimum savings, many can't come up with more cash. They lose their stocks.
A lot besides stocks goes out the window when that happens: The sense of security that high-flying stocks provided; next year's vacation, perhaps; the tuition. Suddenly, instead of counting winnings life becomes a scramble for survival cash.
The worst scenario by far is when the house itself is endangered. Home equity loans became the norm during the 1990s. And, as housing equity rose so also did the amount that eager lenders urged you to spend.
That, perhaps, is the worst of the scene, at least for now. While household debt burdens have been rising, so have housing market values. As a consequence, debt to asset ratios are not as high as in the early 1980s.
In fact, a study by Federal Reserve economists suggests that only ''a truly massive decline in the value of household assets'' would be required to bring debt-to-asset ratios back to those 1980s levels.
Well, there have been truly massive declines in some stocks, of course, but the value of houses seems firm for a while. Still, you have to wonder how much housing prices have risen because stocks have risen.
About all that is known for certain is that housing prices in the high-tech San Francisco Bay area have gone through the roof simultaneously with stock prices, including paychecks denominated in stock options.
The study, cited by the Financial Markets Center, a private-sector think tank that monitors Fed activities and research, found that a 10 percent rise in the total share value of local tech firms accounts for a 1 to 2 percent rise in area housing prices.
It all ties together; one affects the other.
End Adv PMs Thursday, October 19.
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