Monday, March 9, 2009

Global wealth down >$50 trillion in 2008!

This is rather remarkable. From Bloomberg:
The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report.

Asia excluding Japan probably lost about $9.6 trillion, while the Latin American region saw the value of financial assets drop by about $2.1 trillion, said Claudio Loser, a former International Monetary Fund director and the author of the report that was commissioned by the ADB. The report didn’t give a breakdown of asset declines in other regions.

“The loss of financial wealth is enormous, and the consequences for the economies of the world will unfortunately commensurate,” said Loser, now the Latin American president of strategic advisory firm Centennial Group Inc.. “There are serious economic and political stumbling blocks that may well cause the recovery to be costly and slow to consolidate.” (continue reading the article here)

A fair share of the loss was wealth destruction that occurred here in the U.S., which we will have a figure for when the Federal Reserve releases it Flow of Funds data on March 12, 2009. Already, though, U.S. household net worth had fallen $7.1 trillion from its peak in Q3 2007 through Q3 2008. In Q4 2008, home values were slashed 3.4% (according to OFHEO) and the S%P was down 23% on the quarter; both suggest that net worth might be down another $5-6 trillion in Q4 2008, but we will see.

Rebecca Wilder


  1. Ouch. And really we haven't slowed down yet.

  2. Rightly, it's worth destruction, not wealth destruction.

    Wealth destruction happens when bombs fall from the sky and blow up buildings, factory machines, farmland.

    If men are willing to trade one thing another, wealth exists still.

    What's happened is that some men have now decide that another's wealth isn't worth as much as before.

    It's worth destruction, not wealth destruction.

    Why did worth destruction happen? What caused this to happen?

    In short, the money relationship to things has become corrupted owing to central bank action that floods notes and coins into circulation both directly and indirectly through credit-based expansion (aka inflation).

    Worse, contracts have become repudiated because of deception, bogus intelligence and bogus information.

    In any exchange, the key factors are these: thing of worth; money; positive, trustworthy, persuasive information; positive, trustworthy intelligence about the thing of worth and about the quality and quantity of money.

    Academician economists have yet to get the fundamentals down about economics, the science of the exchange of the right to claim one thing for another.

    They ought to quit while they're behind and exit the field.

    Touting credentials like "Ph.D. from Columbia, Princeton, Harvard or MIT" or a Nobel Prize in Economics (from the incompetent Sweden Central Bank) is like saying working as a grifter is a legitimate occupation.

    The rest of the world want practical economists, men who get money and credit.


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