Global Crisis Destroys 40% of World Wealth; Bailout to Hit $4 Trillion

[Dios]

It's important to realise that no capital or consumer goods have actually been destroyed. Our productive capacity has not changed. There's a simple reason all that wealth is gone... it was phoney to begin with.

There are two different issues here, which you are conflating - money and wealth. Money is the medium of exchange for wealth, a step up from barter, so what has been destroyed is lots of money. The problem is the knock on effects to banks which supply money to businesses and so on for capital expansion. Secondary effects include the way that people reduce spending, and thus the amount of money in circulation, which might otherwise have been used to create more wealth.

The actual sum committed to bailouts in the US has been estimated to be almost $11 trillion by the way, with $8 trillion of that specifically assigned.

[markeys]

Incorrect. It never existed.

I have a house. It cost 100k to build.

You have a house next door. It cost 100k to build.

You sell your house in 2006 for 500k.

My house was now worth 500k.

I want to sell my house in 2009. I'll be lucky to get 150k

There's 700k in losses and I haven't left my Garden.

700k wealth gone which you could handle provided you never intented on 'using' the 700k wealth.

The problem we have now arose because you went and took out a chunk of that wealth in loans for your holiday to Siberia, your spanking new Range Rover and maybe an extension to the laundry room to accomodate your wife's every growing clothes obsession.

Now you've been suckered with 100k in actual real losses.

[Cael]

I think this is the real deception because no money has evaporated, it's just been consolidated into the hands of the minority at the top.

The world's richest had taken out more than the entire value of the world economy in Credit Default Swaps before this crisis started. When you have the world's most wealthy people betting more than the entire value of the world economy on a global crash, you can be sure its going to happen, and that more of YOUR wealth is going to be in their possession at the end of it.....

[Colonel Kurtz]

where did all the money go

[Lthse]

The world's richest had taken out more than the entire value of the world economy in Credit Default Swaps before this crisis started. When you have the world's most wealthy people betting more than the entire value of the world economy on a global crash, you can be sure its going to happen, and that more of YOUR wealth is going to be in their possession at the end of it.....

Yeah they really like their boom/bust cycles don't they, while everyone else is scrounging and fighting each other to survive they are buying up cheap assets with their new wealth from insider bets using CDS. No money has evaporated it's just in fewer hands and we're paying for it.