45% world's wealth destroyed

wildfirepow · Aug 25, 2009

Quote from Nattdog:

this is bogus. perhaps 45% of the worlds bubble, paper wealth has been destroyed. When a bubble blows up the realization is NOT that all that wealth was destroyed, but rather that it never existed to begin with.

The worlds real wealth is not all that different. We realize now NOT that we have lost so much, but rather that we were deluded into thinking "we" ever had that much to begin with.

Only when actual cash is invested into an asset it's valuation equals it's monetary value.

Example-: World economy was worth $1600 Trillion which mean actual cash $1600 Trillion was invested into world economy.

Now 45% wealth has been destroyed which means there has been actual cash losses of $750 Trillion.

achilles28 · Aug 25, 2009

Quote from Nattdog:

this is bogus. perhaps 45% of the worlds bubble, paper wealth has been destroyed. When a bubble blows up the realization is NOT that all that wealth was destroyed, but rather that it never existed to begin with.

For example I put in a 20k share order in a thin 10 dollar stock that bids it up 1 a point... Did i REALLY just increase the value of the company 10%? OF course not. It is a short term bubble.

That is what happened to our entire paper economy but on a grand scale, and the bogus money bidding everything up was excessive leverage created by our funny money system.

Guys like schwartzman and the others who are right near the spigot of paper wealth creation were the ones best able to cash in. These Guys use the system to EXPROPRIATE wealth from others, they do not create wealth.

The worlds real wealth is not all that different. We realize now NOT that we have lost so much, but rather that we were deluded into thinking "we" ever had that much to begin with.

That's right.

Return to fair value.

wildfirepow · Aug 25, 2009

The global financial crisis 2008 & 2009 was a result of all-time prices for crude oil, Real estates, commodities & others.

The prices reached all-time high in 2008 due to massive demand from China and India.

Now China & India economy is prospering where as USA amd Europe are collapsing. They have made a meal out of them.

ashatet · Aug 26, 2009

The ones who can fight that mentality are the ones that make the money.

Quote from makloda:

haha Classic! The human brain is wired against taking losses and wants to get back to break even, even if that means holding on and adding to losing positions indefinitely.

wildfirepow · Sep 1, 2009

The $750 Trillion was not deposited into worldwide banks because banks do not have $750 Trillion deposits.

The $750 Trillion was not invested into stock markets, real estate, gold and commodities.

The $750 Trillion was not invested into world GDP because world GDP is $50 Trillion to $100 Trillion (estimated).

So where did 45% wealth or $750 trillion go?. It has been destroyed.

noob_trad3r · Sep 1, 2009

Quote from wildfirepow:

The $750 Trillion was not deposited into worldwide banks because banks do not have $750 Trillion deposits.

The $750 Trillion was not invested into stock markets, real estate, gold and commodities.

The $750 Trillion was not invested into world GDP because world GDP is $50 Trillion to $100 Trillion (estimated).

So where did 45% wealth or $750 trillion go?. It has been destroyed.

I am confused. I though it is just wealth transfer. how do you destroy it?

The guy shorting made the money and the guy long lost the money.

So the bears made money and longs lost money right?

trendlover · Sep 1, 2009

The models make a price of (future) value, true? That money is made from interest over time. So if the product (houses) are not creating cash flow (principal and interest) then it is not worth the future value, true? So people were spending money that is not real today, but expected from the future, true?

atticus · Sep 1, 2009

Quote from wildfirepow:

Schwarzman said problems were then exacerbated by mark-to- market accounting rules. Those rules ask banks and other financial institutions to price assets at a value related to how they would be sold in the open market.

Don't own the stuff at 60x if you can't handle the mark.

u21c3f6 · Sep 1, 2009

This reminds me of a passage in a book (don't remember the title) I read many years ago.

It asked the question: If someone bought a stock for $20, it went up to $50 and was sold on the way back down at $30, how much money was made?

The book's answer was that money was not made but 40% was lost because it could have been sold for $50. :eek:

If only ...

Joe.

myoffices · Sep 1, 2009

Quote from noob_trad3r:

I am confused. I though it is just wealth transfer. how do you destroy it?

The guy shorting made the money and the guy long lost the money.

So the bears made money and longs lost money right?

Wrong- The money managers for many of the funds do not short and they were to proud to call the clients and tell them we have to get out. Thats what happened to Bernie Madoff's clients... The rich invest blindly. Like in 2001 much of the wealth was simply lost. Thats why the uptick rule was cancelled.

Poof gone in a second. How do I know--- I called many clients who stated that their money managers handled everything. When Asked when they heard from the guy they would say months ago meanwhile the portfolio was down and the markets plummetted... Im convinced rich people are fools.