ClusterStock breaks it down specifically to America - I believe (off top of my head) there was somewhere between $50 and $60 Trillion of net worth in the country (assets) in 2007. We've now lost $10.2T in 1 year. So that is somewhere between 17-20% of all US wealth (again some of it imaginary by the bubbles our financial system created) vaporized.
Put another way - we talk every few weeks about the massive obligations coming to current and future generations based on what we've done the past few decades plus what we are doing today. We have many more emergencies, especially of the Medicare variety, coming in the future (less than a decade from what I read when we need to "face up to reality"). Since these numbers are so hard to wrap your arms around just be aware that what was lost in the country in 2008 could effectively have EXTINGUISHED ALL U.S. GOVERNMENT DEBT. Our federal deficit could of been reset to zero with this amount of money. When you think about it that way - you realize how staggering these losses are.
And this is why the recovery - when it comes - will be of a variant nature than we have been used to... (after the government induced (V-shaped) bounce) we'll be returning to a totally different long term trajectory as we rebound. This is center stage for my catch phrase the past 1.5 years - the "Pooring of America". The long term living standards will fall - we will have to pay the piper.
- You'll hear lots of talk about how recessions are caused because people feel poorer or irrationally react to a flood of bad economic news. But the truth is that these depressed feelings are rooted in reality. Americans don't just feel poorer, they are poorer:
- U.S. homeowners lost a cumulative $3.3 trillion in home equity during 2008, according to a report from Zillow. (MortgageWire.)
- The stock market erased $6.9 trillion in shareholder wealth in 2008.
But I'm sure it's all priced in.
2 comments:
Everyone goes to zero when the US defaults on its debt obligations in the next 20-30 years. We are simply not prepared for the expense of taking care of baby boomers in the last and most expensive years of their lives. Generations X, Y, Z are fucked.
That number is staggering, but for shear impact, think back to the day that congress blew off the first TARP bill. 778 point drop in teh DOW and $1.2 trillion lost in the market that day.... Hard to believe that they're screwing around again... Guess a trillion or two doesn't impact politicians if they need a little pork in their bill... jegan
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September 29, 2008: 9:10 PM ET
AMERICA'S MONEY CRISIS
NEW YORK (CNNMoney.com) -- Stocks skidded Monday, with the Dow slumping nearly 778 points, in the biggest single-day point loss ever, after the House rejected the government's $700 billion bank bailout plan.
The day's loss knocked out approximately $1.2 trillion in market value, the first post-$1 trillion day ever, according to a drop in the Dow Jones Wilshire 5000, the broadest measure of the stock market.
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