Yep, that's right, Bill lost $18 billion and yet he has become the richest man in the world again. So how did that happen? Simple, his top two competitors for the title--Warren Buffett and Carlos Slim--each lost $25 billion apiece. Warren had 62, now he is at 37. I guess that is why he said the economy fell off a cliff. Bill had 58 and he now rests at 40. Carlos lost $25 billion. We don't know how much he's got left. These top three men lost at least $68 billion last year.
This story highlights the grand picture of wealth destruction that has just taken place over the past 6 or so months. It is as if a wild fire swept through a National Park destroying all the trees. Just yesterday, Reuters reported that 40-45% of the world's wealth has been destroyed in this great calamity. You can read it here. Says who? Says Stephen Schwarzman, the CEO of the Blackstone Group LP, a private equity firm with a pretty good rep. Some bloggers dispute this figure, claiming it is exaggerated for effect. They believe Schwarzman wants to short the market and is spreading false reports to promote FUD. FUD is a shorters best friend.
I take issue with these bloggers. The story of the billionaires is just one piece of overwhelming evidence that these claims of wealth destruction are on-track. According to Forbes, the top 50 richest people in the year held $4.5 trillion dollars before this crisis struck. Now they hold $2.4 trillion. That indicates a 47% destruction of wealth.
There were 1,125 billionaires in the world before this crisis. 373 fell off the list. Now there are just 755. 18 of them died. 355 lost tons of money. Just 3 new comers joined the list for the first time during this crisis. The biggest looser in the world is Anil Ambani of India. He lost $32 billion = 76% of his total fortune. The stories go on and on. Jerry Yang, the founder of Yahoo! lost half of his total wealth and is no longer one of the world's billionaires. I doubt he will rejoin the list.
Let's think about how much money has been lost by average guys for just one second. Think about my buddy Jerry who had $80k in Wamu. He lost it all. Wealth destruction. He's just a computer programmer like me. Think about guys who bought Citibank or Wachovia, thinking it was a safe investment. Just think about the ordinary folks who bought into Bernard Madoff's Ponzi scheme.
Just how bad is this overall? According to MarketWatch.com, America's Household net worth plunged 18% during the 2008 fiscal year. U.S. Household net worth stood at 62.7 trillion prior to this crisis. It fell to $51.5 trillion. That is another $11.2 trillion of wealth vaporized and destroyed. You can read the report here.
Just how bad is this overall? According to MarketWatch.com, America's Household net worth plunged 18% during the 2008 fiscal year. U.S. Household net worth stood at 62.7 trillion prior to this crisis. It fell to $51.5 trillion. That is another $11.2 trillion of wealth vaporized and destroyed. You can read the report here.
Speaking of Madoff, that little fucker just pleaded guilty today and was ordered to jail. As part of his guilt plea, he opened his books to the authorities. It turns out he accepted a total of $65 billion in investment funds. POOF! Destroyed completely. That is another $65 billion right out the window, into the furnace. This is a picture of wealth destruction.
I used to work for an automotive chemical manufacturing firm named MOC Products of Pacoima. Rumor has it that they are in serious trouble right now. Sales revenues have fallen 30%. They have laid off many workers. They suspended contributions to 401K accounts. Now they are going to shutdown completely 2 Fridays per month. All employees will be furloughed without pay on these days. The only other alternative was more layoffs.
Why is all this happening at MOC? That's a very interesting story. MOC's biggest customers are car dealerships with big automotive repair bays. These guys consume the overwhelming majority of MOC's gross output. Nobody, but nobody is in more trouble than the automotive dealerships in this country. The credit crisis combined with GM & Chrysler's decent into bankruptcy has left these dealerships twisting in the wind. Even the repair bays are suffering as people defer maintenance of their vehicles.
You can call Schwarzman a shorter with an agenda, but I think that's bullshit. I find his figure entirely believable. There is a lot of evidence to back him up.
