45 percent of world's wealth destroyed: Blackstone CEO

[RedEarth]

NEW YORK (Reuters) - Private equity company Blackstone Group LP (BX.N) 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."

http://www.reuters.com/article/ousiv/idUSTRE52966Z20090310

[thereismore]

1. That means the wealth was never there. Where would it otherwise go?

I didn't see houses swallowed by a black hole and gold turn to ashes. I only saw worthless IOU's turn into more worthless IOU's.

[acmavm]

2. I was going to say that it ended up in a very few select bank accounts.

It had to go somewhere. It's gone because we were PAYING PEOPLE. We paid a bunch of foreign banks, that's for sure.

If you could force the bailout recipients to tell what they did with the money, we'd know where the wealth went.

[tonycinla]

8. Exactly!

It was wealth "on Paper",people thought they could trade the "paper money" for real goods in the future but the paper money lost it's value.

[LynzM]

3. Only if you measure wealth in currency...

Which, sadly, we all seem to.

The world still contains exactly the same resources. :(

[B Whale]

4. So, numbers that were on a screen are

no longer on a screen. It seems like they just put them there in the first place and probably will again.

Jeez i still do not understand the financial system one bit.

[MicaelS]

5. Just proves

It was based a on a bubble of paper profits. When the bubble burst they evaporated.

[bemildred]

6. It's like it wasn't real wealth in the first place, eh? nt

[hay rick]

7. It was if you cashed out. nt

[CJCRANE]

9. The commissions and bonuses

paid to the bankers were real enough.

And if the system holds then the trillions of dollars paid by the taxpayer will be real enough too.

The only analogy I can think of is this:

Imagine you were a businessman who paid your customers to take your product and then asked the govt to cover your losses. That seems to be what the banks have done in promoting these unpayable mortgages.

[bemildred]

10. Well yeah, and if you sold your home at the top, you get to keep the money too.

Just like if you win in Las Vegas. But the "values" on which those bonuses were granted, or the price of that house was paid, were fake. In Las Vegas at least they do not pretend that bets have some intrinsic value, that making bets creates "assets".