An almost incomprehensible destruction of wealth has taken place. Stephen Schwarzman, Chairman of The Blackstone Group said that "40% of the world's wealth was destroyed in the last five quarters". Let me repeat that: "40% of the world's wealth has been destroyed in the last five quarters."
At a meeting in Davos, Switzerland, world leaders met to discuss the condition of the world. Putin of Russia said: "the existing financial system has failed." Growth was based on greed. One partner printed money and consumed wealth while the other manufactured cheap goods and saved money. These comments were swipes at the United States and China.
European Central Bank Chief Jean Claude Trichet joined a chorus calling for profound reforms. Bankers who tried to complain were reminded that they are the ones who had to be bailed out.
Most agreed that world economies were very fragile and would take time to repair, and that the world as we knew it is no more.
What are your feelings on this matter?
Reader Comments (Page 1 of 1)
1-29-2009 @ 2:34PM
BHarrison said...
Quote from article: ". . . and that the world as we knew it is no more."
Most people . . . the VAST MAJORITY of the people . . . simply do NOT realize the extent of that statement as it applies to them and their families personally.
The question that "bothers me" is what is REALLY MEANT by the term "DESTROYED"?
Was it all mostly just "paper book" "value"? Did it EVER really exist? Or was it merely "taken" from some and transferred to "others"?
The selling of those overpriced, subprime mortgage homes and condos provided "profits" to the Developers, salespeople, nad the contractors, right? The "destroyed value" is really merely the "financial losses" that eventually occurred to the "last guy 'holding the financial bag", right? But there were many who made money off of these disasters . . . it was merely a "tranfer of wealth" from one party to another, right?
Even in a Ponzi scheme, the amount of money that is "invested" winds up being paid to some one . . . it is just that the fraudulaent "illusion" of phony profits that were generated "on paper" were NEVER REAL, right? So, is that the type of "values' that they are saying were "destroyed"???
If that is the case, then it would appear that 40% of our dollar volume of previous profits (sic. "values") were out and out FRAUDULENT BUSINESS. and yet, we STILL have 9 out of 10 of the CORRUPT CEOs running our FIs and corporations . . . and true "recovery" cannot be achieved until these CORRUPT INDIVIDUALS are PURGED from our business enterprises and upper amnagement.
1-29-2009 @ 3:42PM
BHarrison said...
The best that I can dsicern is that this 40% "loss" is merely in the relative "book value" of assets (homes, stocks, etc.) whose values were artificially inflated and that have now become adjusted downward to a more realistic market value.
Those who took out home euqity loans, based on the previously inflated values, are "indebted" for what they thought that they could have recovered in the sale of their homes.
The government and the FIs merely used the inflated values to prop up their business and the economy. It was all a shell game of sorts. And a lot of Americans feel for the con; and now they will pay the price for being so gullible as to allow themselves to be duped in all of this.
Congress IS the PRIMARY CULPRIT in all of this. Basically, they sould out to the speical interests groups and allowed and enabled all of the frauds to occur.
As was noted on NPR yesterday, the corporations who are receiving TARP monies are hiring HUNDREDS of lobbyists to solicit more aid from Congress, they are paying bonuses and "other compensations", and they are STILL making significant "political contributions" to political parites and Congressmen.
As was suggested, any corporation that receives TARP monies should NOT be able to do any of this UNTIL they have fully repaid the TARP monies, with interests.
Otherwise, the corruption and the defrauding of the American people continues.