45 Percent Of World's Wealth Destroyed

Thank you conservative love of deregulation, underfunding the SEC and letting corporations run your party. And thank you Alan Greenspan. I digress.

Blackstone Group LP 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."

People worked just as hard, it's that the financial world and Wall St invented risky new investments and sold them around the world. Greed blinded everyone, but Schwarzman is calling out a particular group in this massive web of greed and deception.

He put part of the blame for the financial crisis to credit rating agencies.

"What's pretty clear is that, if you were looking for one culprit out of the many, many, many culprits, you have to point your finger at the rating agencies," he said.

Rating companies have been the focus of intense criticism for their role in 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 to be paper that was in many situations going to end up defaulting, then you really had the makings of a global problem," he said.

You then have to add mark-to-market accounting, made popular by Enron, of asking banks and other financial institutions to price assets at a value related to how they would be sold in the open market. When those prices are over-valued in a bubble, almost fictitious, the house of cards begins to implode once real prices of homes drop.

The fact that so many different industries blindly played this mortgage game is staggering. The hard work of many was wiped out by easy schemes of a few.

Source: Reuters