45 percent of world's wealth destroyed says Blackstone CEO

[girl gone mad]

45 percent of world's wealth destroyed says Blackstone CEO
http://www.iht.com/articles/reuters/2009/03/10/business/OUKBS-UK-BLACKSTONE.php

Private equity company Blackstone Group LP CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis.

"Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

U.S. Treasury Secretary Timothy Geithner plans to unfreeze credit markets through a new program that will combine public and private capital in a fund that would buy bank toxic assets of up to $1 trillion (728 billion pounds).

"In all likelihood, that will have the private sector buy troubled assets to clean the banks out in terms of providing leverage ... so that we can get more money back into the banking system," Schwarzman said.

He expects the private sector to end up making "some good money doing that," but added there were complex issues on how to price toxic assets.

He put part of the blame for the financial crisis to credit rating agencies.

[w4rma]

1. I don't think we need to put more money into the banking system.

The banking system has enough money in it and power over us.

[PDJane]

2. Nationalize the banks. It's been done before.

And then regulate the hell out of them.

Frankly, if that much of the world's wealth has been destroyed, it was likely only there on paper; the wealth wasn't any more real than the paper it was written on. If we build up the banking system without severe and ongoing regulations, then we'll go through this in another ten years. The bubbles just keep frothing up, and the wealth they produce is as ephemeral as the bubbles in the sink.

[PM Martin]

17. If the banks are not nationalized and cleaned up

this recession we are in will become THE GREATEST DEPRESSION!
And it will get nasty out there.

[peacetalksforall]

3. Why do I think that maneuvers to kill unions and send the jobs away and manipulate

wall street was meant to bring the little people to their knees so that we could be better controlled and more profit could be made on a one world type commerce.

But, wasn't it supposed to stop at the point where we would and could still be working and paying the taxes that the rich love and buying things so that those who owned at the high end and the stockholders could still make money off our little purchases and their usual sales of weapons and nuclear technology and accessories.

I think it wasn't meant to touch the rich?

Control was lost while trying to get control?

[Po_d Mainiac]

15. no one wanted to leave the party, while there was still some punch left N/T

[Donnachaidh]

4. Now this is where I have to ask a dumb question...

Is this *wealth* that they claim is destroyed -- how was it destroyed? Was it burned up? Tossed into a volcano to appease gods -- used as toilet paper -- what? And yes, I'm being a smartass.

Wasn't all this *wealth* actually bets on futures, or loans made when they shouldn't have been made (ie, toxic assets), which were then bundled and sold around the world -- so the next question is -- how can they consider it *wealth* if it really didn't exist in the first place?

The numbers are so huge, and I keep hearing how WE (the taxpayer's) are going to be covering the asses of these billionaire crapshooters, and it just amazes me.

WHY are we still doing this? :shrug:

[truedelphi]

14. Because Obama promised us change, and although he remains

Clueless about the need to apply a tourniquet before you start transfusing the patient, we have to give him a chance or we hate America!!

Too bad if the average citizen's economic status goes down the toilet while we give him his chance. A letter to the editor some three weeks ago - guy said "Why didn't they just allot $ 25,000 to every one in America to PAY up?"

And economists have all sorts of reasons why that wouldn't be good. But on the other hand, That letter writer's policy would insure that we keep our homes, pay our credit cards, buff up our businesses, pay for a year or two or more of college, etc.

As it is now, we the average person are being thrown out of our homes, forced out of college, watch our businesses crumble, etc. But at least we get the thrill of knowing that we are subsidizing the worst of the bankers!

[upi402]

5. Swiss banks and offshore havens = destroyed

i could be wrong :shrug:
been called a tinfoiler before...

[Donnachaidh]

6. it would explain the Swiss suddenly remembering they have LAWS against releasing information on

accounts kept in their country. Bank gave up 250 names -- that's enough raw meat for the dirty masses. But the rest are protected.

[Hello_Kitty]

16. I got into a flamewar with a DUer a couple weeks ago about this

He very indignantly informed me that the right of rich people to hide their stolen lucre in secret Swiss bank accounts is SACROSANCT. Won't call him out but his user name is Latin for "one of a kind".

[upi402]

18. November 2006

* had 1,000 posts but I've never heard of him before. Odd that someone here is ardently into protecting the powerful against the powerless AFTER the powerful have so abused their power, and so damaged the powerless. Hmmmm

[orwell]

7. Wealth?

This so-called "Master of the Universe" doesn't even understand the word.

Wealth is not notational paper currency, fake credits, imaginary derivatives, or any of the other slop we have been trained to accept as value.

We are about to find out what is truly precious, whether we want to or not.

What a putz...

[Webster Green]

9. Indeed!

Wealth might be have been found in all the manufacturing jobs that we have lost.

It sure isn't found in all the bullshit schemes that have been foisted upon us. :eyes:

[exboyfil]

10. What has actually happened is that trillions of dollars which

represented the actual savings of working people generated by their labor has been destroyed when they purchased equities (mostly through their retirement plans) that later tanked. In general terms anyone who has purchased and held equities since the second term of Bill Clinton has lost a portion of the money made through their labor - in some cases a majority of what they actually saved. It is even worse when you consider that those earnings, in addition to losing actual value, have also lost real value through inflation.

Throw on top anyone who purchased a house in a bubble market which collapsed.

Throw in the bailouts to these masters of the universe of current and future tax dollars (and the associated interest on the debt) that will have to be eventually paid. We have sent nearly as much money so far to AIG as went into the Social Security Trust fund ($200B) last year. Think about how much sweat and work was involved in that $200B.

Throw in all the upside down pensions that were assuming 8% investment returns to make future defined benefit payments. Where is that money going to come from?

Throw in the money lost in prepaid and 529 mutual fund college tuition programs.

[orwell]

13. If you buy stock...

...you do not buy a notational value. You buy the net productive value of the business.

If you haven't sold the stock (in other words you are a long term investor and not a trader) you still hold the same share of the productive value of the company less any dilution from subsequent stock issuance not tied to efficient productive capacity. Very long term investors by and large do fine because they are participating in the true productive capacity of millions of human beings. The only things worth considering with investments is time and asset allocation. The rest is gambling.

The blather everyone watches everyday is the glorified casino known as "stock market". As someone who traded for a hedge fund, I can assure you that the "stock market" has and always will be a rigged game set up to fleece the public with dreams of riches. I got out of it 25 years ago because it was crooked. My bosses should have gone to jail. They were all pillars of the community. They worked 4 hours a day and made millions of dollars a year. They routinely broke securities laws. Nobody in the industry batted an eye lash. It was accepted practice even though everyone knew it was unethical.


True physical wealth lies in the intelligence and skill of all of us, whether management or janitor, housewife or teacher, poet or painter. It is all of our intellectual and physical gifts and the sustainable management of our natural resources that represents true wealth. The rest is a notational game.

You can't eat sleep or reproduce with gold, paper assets, promises of future payments or any of the other slop we have been conditioned to think of as "wealth", unless the rest of society agrees to accept these abstractions as proxies for the real thing. These notational entities have constantly changed throughout human history, subject to the whims of the constant parade of elites who rig the game to insure that the "great unwashed" remain tied to a sophisticated form of indentured servitude.

If the notational game crashes we will not forget the theory of relativity, the advanced engineering to build a safe bridge across the Golden Gate, or the mapping of the human genome. Shakespeare will not disappear, nor will the pyramids in Egypt. The buildings will still be there. The power plants won't go away. The fish won't evaporate from the seas.

We should be paying far more attention to how we manage our resources in a sustainable way and stop this Ponzi scheme with our environment. That is the true wealth destruction.

We need to stop letting the overlords dictate the terms of the debate that keep us tied to the plow while they live off the fat of the land and the sweat of our labor. It is no accident that all the productivity gains of the last two decades have been flowing to the top of the income ladder. It is by design. The ruling elite have concocted one of the greatest scams of all time, the impoverishment of a large swath of the planet with the willful compliance of the serfs.

The king is dead, long live the king.

[aquart]

8. Did any of it exist in the first place?

[notesdev]

11. Nope

Real wealth can't disappear in a flurry of trading activity. What disappeared was fictional, perceived wealth.

Personally, I think this situation is great for equalizing wealth disparity. Things are moving in the direction they should - actual labor rising in value relative to assets. And that's how it should be. Performance of labor is a greater service to the economy than the mere possession of title.

[DemReadingDU]

21. A very very few individuals got the wealth

As evidenced by what happened in the stock market in the past year. Let's say there was a very wealthy person who had a billion in the market at it's highest point (October 2007). If that person withdrew that billion in Oct 2007, and put that amount in Treasury Bills, that person would still have a billion preserved.

For every seller, there is a buyer.

The buyer of that billion decided to remain in the market, and by October 2008, lost nearly 50%.

But that original seller, still has a billion in Treasury Bills.

Who was that original seller? Who has that wealth? Where is that wealth now? Is it still in Treasury Bills? Is it in gold? We need to follow the money trail. A very very few individuals have the wealth.

[quadropusrex]

12. Was it real asset value or bubble wealth?

Broad statements from CEO's don't impress me.

The collapse of bubble debt erased a buttload of gains in Asia, but those gains were accomplished from selling slave wages. They were assets on their books & when they came to the American markets seeking safe haven from the '97 Asian Financial Crisis, they made our system overly cash flush with our own trade deficits.

The upshot is that in this globalized mess everyone has been left with a lot of pointlessly inflated debt that we some how will have to write off.

We can do it through massive losses that'd lead to massive nationalization (last recourse) OR we will simply down-flate the debt via inflation.

This will have to be done delicately, b/c although the dollar, pound & mark have some gold backing them, the Chinese Yuan has no gold behind it, so it's vulnerable to being weakened against other currencies. Worse for the Chinese if we devalue the debt obligations they hold via too much inflation -- too fast a rate of inflation -- they'll also get burned, watching our obligations to them global dollars lose value too fast. Their cash flow on our debt would shrink too fast, and in this era of thinner margins, it really matters.

This is especially important since China is supposed to go on its own stimulus spending spree in order to save the world's economies. They can't do it with a devalued Yuan or devalued dollar.

[eridani]

19. However, we need to destroy more fake wealth so we can get a handle on--

--how much real wealth we have. That would include physical and human capital, which hasn't changed much over the past year.

[GoesTo11]

20. This is a lesson to people who wanted a free lunch retirement

You aren't going to just put in $10,000 when you are 25 and retire a millionaire. Take that and stick it in your 401k.