totally agree. this is like being informed that 10 of your imaginary friends were gunned down last night. sure, for awhile you will miss them, but, really, things are gonna be ok.
I was talking to my dad about the great depression the other day. He and his family were so poor that one year, for Christmas dinner, they had peas. Even afterward the were incredibly poor. He went through high school wearing the same four pairs of jeans, which, since he grew seven inches during that time, looked pretty stupid towards the end of his education there. His first car cost (I kid you not) 35 dollars and two chickens ----- and barely ran. He pointed out that we're so much better equipped to handle a great depression now than we were then, at least materially. Houses are so much better, cars are so much better, clothes are so much better .... and in much greater supply. My gf, for example, must have 40 pairs of jeans and 50 pairs of shoes, maybe more.
Well when retired people have to go to work because their next egg is gone, then I think it is safe to say their wealth has been destroyed.
People are hurting, there is no doubt about that. It is also true that, as Oilfield says, when you are retired and living off of investments and interest from those, then that 'wealth' isn't imaginary. Of course on the other hand, wealth moves based on valuations. Valuations have gone done, and sometimes that doesn't effect wealth. If you own 50 acres, you still own them. If you have a portfolio worth 1 million, that is now worth 500k... then you did lose something. It isn't just a number on a piece of paper. That being said, we are NO WHERE near a great depression, nor really a small depression. People are so spoiled today they have NO idea what it was like. Our idea of 'middle class' is very different, and our expectations way out of porportion.
Hornius, You don't think that dividends are based on stock worth? How about if you are living on interest income from a CD and you are ready to roll it over... and are getting 1% instead of 5% as many I know are. Look, I am 32, and I am NOT cashing in, and it doesn't effect me greatly. When I talk to people in their 70s and 80s who are retired? Yea, it does make a HUGE difference.
I don't agree entirely with 45% of wealth being destroyed if that refers to the stock market valuation of 13000. Stock market valuations are set by a small number of people who participate in buying and selling stocks. It is plain silly to think that everyone else's holdings of those same stocks some how magically take on the same value as those few who actual buy and sell. What if everyone sells their stock at the same time? Or if all try to buy the same stock at the same time? Really the only wealth is that, which those few people retain when they have sold their stock at a market maximum.
so if someone lost half their retirement fund, where did the money go? they lost their wealth, but was it "lost", or simply transferred? It seems that real wealth is lost when, as the poster above says, factories are destroyed. When stock prices fall, wealth is transferred. A great wealth transfer
There are different defnitions of wealth, but IMO it boils down to purchasing power for the individual or entity whose "wealth" is being measured. If the value of your stocks declines by 40%, but the prices for everything that you buy (e.g. housing, utilities, food, gas, clothes, travel, etc.) also drops by 40%, then your "wealth" is really unchanged. On the other hand, the value of your home and stocks and your salary increased 10% every single year but if the price of everything (e.g. medical care, tuition, housing, food, etc.) rose by 15% a year, then your "wealth" declined in real terms. But it's usually not that simple. If, for example, the prices of farm crops increase, that would mean more income for farmers and less purchasing power for consumers. For large farming nations like the United States and Canada, higher farm prices could be an overall positive, while for importing nations like Japan it is a net negative. But it's probably the opposite for electronics manufacturing and sales. Which also brings up the point that, while "wealth" is definitely important, an individual's (or company's or nation's) ability to generate ongoing [net positive] income is more important than its current level of wealth. The exception is for persons who are retired (who are done working and who plan to survive only on what "wealth" they have left).
