Not to be a downer, but I need to point out that the bear market isn’t going anywhere anytime soon. Here’s why:

• 1. The banking crisis has not been magically fixed. Despite nearly $356 billion of taxpayers’ money that the government has thrown at our nation’s banks, the banking crisis is nowhere near a resolution. The International Monetary Fund (IMF) recently estimated that toxic debts (mortgages, car loans, etc. that consumers are just walking away from) could reach as high as $4 trillion. A shocking figure, yes, but even more disturbing is the fact that a mere three months ago, the IMF’s estimate was $2.2 trillion. Quite an indication that the banking crisis wasn’t magically fixed by the government’s handouts, isn’t it?
• 2. Job loss numbers haven’t been seen since the Great Depression. Again, I hate to be the bearer of bad news, but things aren’t looking good for the job market. As 663,000 Americans lost their jobs in March of this year, the national unemployment level leapt to 8.5 percent. That’s the highest it’s been throughout the past 6 recessions (see below). Stay tuned in the near future, because I’ll be talking about ways to safeguard your job – and, therefore, your finances.

Source: Time.com

• 3. Let’s not forget about the housing market, which isn’t looking good. The Home Price Index was down 18.6 percent from the prior year as of December 2008. A month later, the decline had reached 19 percent, which tells us that the market is getting worse, not better. It’s a snowball effect: the economy is causing hundreds of thousands of people to lose their jobs and the pickings for new jobs are slim, so that leaves countless Americans who can’t afford to pay their mortgages. The chart below shows how the numbers of Americans who had seriously delinquent loans rose steadily throughout 2008 and then made a jump in the fourth quarter. And if people can’t afford their existing homes, they certainly won’t be buying new homes, which means the construction industry is laying off workers, who are then losing their homes…it’s a vicious cycle that’s only getting worse.

Source: Calculated Risk

Check back for the final two reasons that the bear market is getting worse in my next blog post, “The bear market is getting worse, not better (Part 2 of 2).

Tags: Home Price Index, IMF, International Monetary Fund