[Restorer]

"We are going to get confirmation that hundreds of billions of dollars in shareholder capital has been wasted or destroyed," says David Tice, manager of the Prudent Bear fund, which makes bets that certain stocks will fall.

A more accurate assessment would be that much of this "value" never really existed.

When someone invests $1,000 and within a year the stock goes to to $20,000 and then loses all its value, it is invariably reported as a loss of $20,000, as though $20,000 of value ever really existed. The actual "loss," of course is $1,000, plus a reasonable one year return on investment.

This is the type of loss many of the Enron employees suffered, and is is different only in degree from a Vegas gambler who starts with $500, is momentarily up to $50000 and then loses it all.

[proxy_user]

This also applies when one company with overpriced stock uses stock to buy another company whose stock is also overpriced. The next year they have to turn around and write off billions in 'goodwill' that never really existed--except on the stock exchange.

[Bayou City]

...Moreover, a company with atrophied assets and a ballooning debt-to-asset ratio may find it harder to borrow...

I agree somewhat with your statement, however a drop in a companies equity could affect their credit rating which would make it more difficult to borrow money to conduct their day to day operations. This, I believe, is what could rattle the market.