The Wealth Still Exists.

I just ran into this quote on a reuters article:

"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."

I can't help but thinking this is absurd. To destroy 45% of the worlds wealth would require massive war. Close to half the homes, food, cars, factories, roads, airports and so on would have to be destroyed; technologies would need to be lost forever and so on.

None of this has happened. In fact very little real wealth has actually been destroyed. I see about the same number of homes in this town, we just decided to value them less because we have way more homes than we need. I don't see any sign that we are growing any less food, or maintaining less roads. We certainly are making less cars, but we have about as many of them driving around our roads as a year ago. Oil production is falling fast, which is a little surprising since prices are at fairly normal levels(it was the prices of the last three years that were unusual). Maybe this will throw a monkey wrench into the economy, but I am inclined to believe it is something that can be worked around.

What really changed is we decided all of these pieces of paper that we once considered valuable, are simply not of much use. They never had all that much importance, but we decided to label them as useful, and trade them back and forth. That is a far less scary problem to fix. We still have enough labor and capital for the economy to be doing just fine in five years. This isn't post war Europe. We just need to figure out who goes bankrupt, and who takes control of these resources, and figure out what jobs are simply no longer necessary.