World Wealth War

Posted by Izabella Kaminska on Feb 06 12:30.
FT Alphaville

There is an interesting statistic in Morgan Stanley’s latest note:

The result of the current financial crisis has been a destruction of world wealth which on our calculation has since mid 2007 amounted to approximately US$20trn (or down 16% from its peak, which has been estimated at US$125trn by the United Nations).

This is the largest absolute and percentage decline in world wealth since the physical destruction of WW2. For the US component of world wealth, the primary source for these data is the US Federal Reserve’s Z1 report. This is currently available through end Q3 and shows a US$7trn decline from the peak. Factoring in the large declines in the S&P in October, further falls in house prices and credit-related securities (e.g., RMBS / CMBS), we estimate a further US$5.5trn decline in Q4 to around US$51.4trn (down from a peak of approximately US$65trn).