COMMENT: If one is to use history as a guide, the United States is in the midst of a “BBB stress scenario”. The contraction in GDP from Q3 2008 to the end of Q2 2009 has been 2.79%, unemployment is currently at 9.8% and the stock market, as measured by the S&P 500 declined 56.77% between the October 10, 2007 close and the March 9, 2009 close. As page 14 of the PDF points out, a BBB stress scenario is typified by a “GDP decline of as much as 3% and unemployment at 10%”. “A drop in the stock market by up to 50% would similarly indicate moderate stress”. While the stock market pull back is north of the 50% figure it did not quite reach 60% as an “A” stress scenario would necessitate. To date, we also have not seen a 6% GDP contraction or 15% unemployment. With GDP projected to have risen over Q3 2009, due in part to federal stimulus programs, at this point in time a GDP contraction this large is looking less and less likely. While unemployment is likely to rise over the next three to six months, current estimates are in the 10%-11% range, painful, but a far cry from 15%. Using this “stress scenario” concept the current recession is most closely related to the 1982 recession that lasted for 16 months. Other BBB stress scenarios that have occurred in the United States include the 1973, 1957, 1948, 1873 and 1807 recessions.