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Posted on Mar 13, 2009 - 1:44am by John P. in Finance, News
This is a fascinating report from Megan Davies and Walden Siew of Reuter’s. Thanks to Jacques Snyman for sharing the link over on Facebook.
45 percent of world’s wealth destroyed: Blackstone CEO
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.”
So, if your 401k is suffering, well… join the club! The whole world is in this one together, and that means we all have to get together and work our way out if it.
He put part of the blame for the financial crisis to credit rating agencies.
“What’s pretty clear is that, if you were looking for one culprit out of the many, many, many culprits, you have to point your finger at the rating agencies,” he said.
Rating companies have been the focus of intense criticism for their role in granting top “AAA” ratings for complex bonds that later plummeted in value, resulting in subsequent rating cuts, in many cases to junk status.
“Once you bought into … the Triple A paper and it turned out to be paper that was in many situations going to end up defaulting, then you really had the makings of a global problem,” he said.
Let me tell you what is going to change the game in my opinion. Technological innovation.
Right now, what we need are some new and exciting disruptive technologies to get people fired up again. Everyone is going to keep hoarding and scrimping and saving until something comes along that they figure delivers so much value that they just can’t live without it!
What could that be? Well:
Bottom line people… wishing about changing the world isn’t going to make it happen! We have to ALL get off our asses and work our way out of it. So quit complaining and start innovating a way out of this mess and we’ll all be just fine.
I think there is no point in pointing fingers at financial insitutions itself anymore. Govertments need to be smarted in their policies and learn from the mistakes, and change the things so we can look forward for brigher world economy.
We need to thank Bush for destroying the wealth by initiating war with under developed countries.
Great point, John. In an age when all we’re exposed to in the print and news media is government solutions, I found refreshing your suggestion that ingenuity, not government intervention, is the answer to our economic woes.
I also agree about the 401K thing, although some aren’t as large as others, a 30-40% drop in the balance affects us all with scalar equality.
Best regards,
Matt
That is quite a scary statistic. I read an article this morning that said the UK has lost something like 17% of their wealth. Paper based assets are not the ones to be holding right now!
My dad is seeing a drop in 401k everytime he sees the report. He wants to take all the money out as soon as possible. He is not retiring for another 10 years or so. Is this a good choice?
i can’t agree with the perspective that defines wealth only in dollars. yes, our economy is crashing and burning, and it’s happened pretty quickly. but in terms of the destruction of our wealth, well, that’s been going on for years (and wall street had a lot to do with making it happen) — the loss of rainforests, thousands of species gone extinct, climate havoc, melting polar caps, a poisoned food system, less and less clean water available for more and more people… the list goes on, and i think that’s the true definition of wealth. a safe planet to live upon, safe food to eat, harmony with other species, clean water, clean air… let’s not fall into the trap of defining our world through the lens of money alone, because it’s that kind of thinking that got us to this point.
Jackie,
In this case I think the guy was just putting a quantitative value on the real dollars that have been “lost” in this recession/depression, but I completely agree with you.
Wealth is certainly about a lot more than money. Frankly, we all need the things you mention… a nice place to live, clean air to breath, etc. And let’s not forget the most important thing of all… love!
John
Tell me about it, the worldwide economic downturn has simply decimated my business (exotic cars)