This extraordinary loss of wealth raises a huge question: was that wealth real in the first place?
Put it this way. Hardly any of us have lost proportionately as much as Elon Musk or Mark Zuckerberg, for you would have to be very unlucky or unwise for that to happen. But nearly all of us will be a bit poorer than we were a year ago. Some of our wealth has been destroyed too.
The managing director of the International Monetary Fund, Kristalina Georgieva, has just warned in an interview on CNN that one third of the world will be in recession this year. That includes the UK. For example, the Confederation of British Industrythe economy will decline by 0.4 per cent this year. The fall in asset prices is not the only reason why much of the world will go into recession, but it is certainly associated with it.
All asset bubbles are eventually popped. This one has been, and while the months ahead will be difficult for everyone, we may be quite a long way through the necessary and painful return to common sense investment values. And that will be the base for renewed and sustainable growth.
I think this is partly true, but only partly. There are plenty of examples where countries have invested huge amounts with disappointing results. In many cases, fast-growing economies have to invest a lotthey are fast-growing. They have to build homes for workers, infrastructure to get products out, training facilities and so on.
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