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Mar 15, 2009

Sense on Wealth destroyed.

Cartoon: by Hurwitt

A post from Patrick Joubert Conlon, demonstrates a greater understanding of economics than any of the pundits, or political panic pushers:

According to the CEO of Blackstone:

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."

Patrick replies:

Balls! The only "wealth that has been destroyed" is on paper. The assets are still there. The houses and factories are still there. Okay, so the equity in the houses disappeared and the factories now have out of control debt due to leveraged investing. But that's all on paper. No sane home-owner has ever banked on equity. It's ephemeral and unreliable. And no sane businessman has ever borrowed more money that his company can collateralize. That disappeared "wealth" was fake to start with. Good riddance. Now let's get back to creating real wealth using sound economic principles not this Ponzi scheme of debt that took the place of real capitalism two decades ago.

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