Posted on 03/12/2009 10:10:43 AM PDT by Liz
Blackstone Group LP CEO Stephen Schwarzman said up to 45% of the world's wealth has been destroyed by the global credit crisis in little less than a year and a half," he told the Japan Society. "This is absolutely unprecedented in our lifetime." ......He put part of the blame on credit rating agencies. Rating companies have been the focus of intense criticism for 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 was defaulting, then you really had the makings of a global problem," he said. Schwarzman said problems were exacerbated by mark-to-market accounting rules......that ask banks and other financial institutions to price assets at a value related to how they would be sold in the open market.......Schwarzman said it made sense to buy cyclical names, which are less exposed to the economic cycles.....investors also may find value in debt products, including "senior layers of certain securitizations," where investors can see 15-20% returns.......he said there were "pockets of strength" in China, which is committed to getting to an 8% growth level, and in India, where the economy is slowing but banks are in good shape.
(Excerpt) Read more at reuters.com ...
As long as folks hold on to their stocks, that wealth will return as the markets rebound. Wealth is only destroyed, if people sell their stocks and cash out at the bottom.
Yes, their paper is worth less today. Their property values are also worth less today. When markets rebound, wealth will return.
“Lay not up for yourselves treasures on earth....”
Who’s responsible for this again?
More accurately, 45% of wealth was a shell game that only existed on paper.
I’m sure that half the on-paper wealth of Holland was destroyed in the tulip bulb mania, too. So? It was never real, any more than a 1200 sq ft dump in Chula Vista was worth a half a million dollars.
Even so, we’ve lost trillions of dollars of economic opportunity. It started under W and it’s continuing under Obama.
45%? The half which never really existed or had any value in the first place.
That kind of advice....has been given for years. And it's horribly wrong headed. I can give you literally hundreds of examples....
To not have a plan when investing...IOW, having a stop loss point...is folly. And very expensive...
I've watched people hold stocks from the $200 level to $3 level....with advice like you are giving. And they will probably not live long enough to recoup their money.
FWIW-
the wealth hasn’t been destroyed.
it’s changed hands mostly from hard assets and equities to cash
Blackstone does not exactly have the best returns to start.
Well, if “wealth” is nothing more than numbers on paper, then yeah, it’s been destroyed.
I prefer to view it as “revalued”.
The SEC should make it illegal for any security to be sold with information about a rating that the issuer paid for. That was the root of the problem, and for any regulated mutual fund to advertise the ratings profile of its holdings with reference to any issuer-paid ratings. All the ratings were wildly inflated, because the issuers requesting the ratings were the paying clients of the rating agencies. You’d have to be seriously retarded to believe this process would result in objective ratings. Ratings generated in this manner are inherently fraudulent, and should thus be prohibited in public securities transactions.
Money is not wealth. It is only a claim on wealth. 45% of the claims have disappeared. The wealth is still there.
The question is whether wealth creation will still be possible and encouraged under Obama’s New World Order.
I have come to that same conclusion....a portfolio must be actively managed and balanced.
I have more faith in my own abilities than a managers' unless they owe me something.
Once DLJ (Credit Suisse) owed us a nice chunk for a coke headed broker's screw ups. They paid us back with IPO inside prices on offering day. It was like the lottery.
Only time a broker has ever made me real money.
That “wealth” was an illusion.
....wealth was obviously created by all those banking industry intergalactic checks, collateralized debt obligations out of wall street and futures derivitives....
yep...free wealth...
45% of wealth??
how much of that was a bubble?
45% of the worlds wealth destroyed by socialism.
thanks liberals, we wouldn’t be in this mess if not for your ridiculous regulations and taxes.
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