By some estimates, combined losses in commodities, stocks, bonds, real estate are greater than $60 trillion. This is beyond rescue. The chart below, borrowed from Dr. Marc Faber's Market Commentary December 1, 2008, is devastating. The chart shows a stunning loss of $30 trillion stock market wealth around the world. http://www.marketoracle.co.uk/Article7923.html
Yes, but these markets are for speculation (investing), they are risky and you can lose everything. They are not supposed to be rescued, and they will always fluctuate in price. People have no problems when their assets rise 100-200% of course, but when it is down 30% or more, they panic, because they learned that everything will go up as long as you wait long enough. And as long as there is uncertainty, people will continue to panic. Some of the markets will rise when the economy gets back on it's feet. But most will fluctuate. But yes, the numbers are crazy over such a short period. Remember, all crises are temporary.
Good points.... And also one must add the losses from the multi-trillion derivatives market....particularly when examining what is left of the major financial institutions of the world.... This is a valuation issue with respect to legal agreements about price.... One cannot solve this issue with government policy being that it will save the day .... "all of a sudden" providing creativity, innovation, and all the other items that are missing from the economy.... Also, policies that reflect short term confidence will only generate short term obligations...ie rolling over short term paper .....The gains are so small in this category that recouping what was lost would seem like forever....one must also add to this the skewed babyboomer demographic....and their need to liquidate.... What has to happen to shorten the time of recovery is to create permanent government policy that will enable innovations and productivity in the private sector .... This would be a 10% consumption tax....no other taxes.... Then valuations could quickly fill the gap of massive loss .... Government cannot create these valuations....and thus the government cannot offer a solution as a productive entity. It can offer a solution by making structural regulatory changes..... http://seekingalpha.com/article/113...entury-and-beyond?source=article_sb_commented
I think worldwide leaders/politicians are hiding "Big secrets" from worldwide people because when the world governments invested some $5 Trillion into "sinking world economy" there was no mention of $60 trillion loss from Worldwide investments. The $60 Trillion loss has appeared in "financial media" only. Such "massive loss" should have been highlighted/declared immediately by world leaders at the time of granting $5 Trillion bail-out.
But ultimately $60 Trillion loss will affect the sales of all industries worldwide because now world economy is poorer by $60 Trillion. Also, worldwide governments further invested $5 Trillion+ to rescue/save speculative markets.
Only on paper, the money were just that, paper money. Suppose a company has 1 million shares of stock priced at $100 each, giving it a market value of $100 million. Over the next few days, someone buys $5 million worth of stock. Speculation drives the share price to $140, and suddenly, the company has a market value of $140 million. In this case, a $5 million investment has created a $40 million increase in market value. Is the company really worth $140 million? Not if everyone tried to sell their stock at once. The first person might get $140, but everyone else would get less, probably much less. It is pure supply and demand that dictates the fluctuating prices.
Example-: A person has 500 shares of $100 each. He has plans of purchasing a car worth $50,000 by selling the shares. But the share price crash to $70, so now he has $35,000 only. He will abondon his car purchase plans. Ultimately car sales fall and this will further crash the stock markets. It will be a "Domino affect".