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Purely Dominica

Purely Dominica


Forbes list of richest people showed that even the rich are affected by the current financial state. 793 people made the list compared to last years 1,125 billionaires. 355 people fell off the list due to their fortunes loss,and 18 people died.

The last time the list had more people drop off than be added was in 2003. The average net worth of the billionaires also fell 23% down to $3 billion. Bill Gates beat Warren Buffet this year to take back the number 1 spot, after losing $18 billion.

The person who lost the most was Anil Ambani who lost 76% of his net worth which was in Reliance Communications, Reliance Power, and Reliance Capital. 29 other Indian’s lost their status due to India’s stock market.

Can someone clarify this to me? Explain to me like I was a 4-year-old, because I just can’t figure it out.

If the world’s richest people are losing their money, where is it all going? I’d figure that would lead to a more even spread of money between poorer people around the world, but that’s not the case. So again, what happens to all that money? I’m listening!

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3 Comments »

Comment by Suki
2009-03-12 14:50:17

The money was never there to begin with – it’s called Hypothetical Future Value. People believe that in the future the company will be worth a certain amount based on the value of the dollar etc. If the dollar is devalued, then people are “worth” less. The money did not “go” anywhere. In the end, all market speculation is a Ponzi scheme with a lot of “experts” encouraging people with the a little now for a lot later philosophy. Business is so tangled that it is virtually impossible to get a sense of a well run business without relying solely on their profit statements. The problem with profit statements though is that you don’t know how they were able to turn a profit. Did the company borrow the money to pay the dividends? You don’t know. I sense a fearful tone in not only the post but in people generally. What is there to fear? Are we so uncivilized that we do not believe we can, in a fairly orderly manner, rebuild if the empire were to falter? Do we really need the comfort of money to mentally believe in our future survival? Are we really going to fight because there is no money? This focus on where did the money go by many parties is rather unhealthy. At the end of the day, money is largely irrelevant, if you want to see change, go out and spend what you have and tomorrow it will come back to you. Let’s bring some optimism back into our viewpoints, the sky is not falling, the world is not ending (changing, yes – ending, no), and we will endure and thrive as well always do.

 
Comment by Joel Halfwassen
2009-03-13 14:28:51

It didn’t go anywhere as it was all on paper to begin with. To get an individual’s worth you add up not just the cash, but all assets as well. That includes real estate, stocks, capital equipment, etc. With the fall of both the stock markets and the real estate markets those holding dropped in value and therefore the value of the individual’s wealth dropped. This is one of my complaints against the whole argument that the “rich keep getting richer”. They don’t actually have that wealth in cash or cash-like agents. Just that their long-term assets gain value due to appreciation and then they can borrow money to buy more assets and use that appreciation as collateral. Normally this practice is a safe bet. However, when a market goes crazy and then plummets like the real estate market just did the system breaks down. That being said it has been a safe system since the 1940s and probably will be again in 3-4 years.

Joel

 
Comment by Joel Halfwassen
2009-03-13 14:37:04

And actually as I think about it even cash isn’t really totally safe. There is no real guarantee that the value will not change over time. My wife is Ukrainian and I will use her family as an example. Over the last year her parents have been playing a shell game using US Dollars, Russian Rubles, EU Euros, and Ukrainian Hryvnia. They keep bank accounts with each and spend only from the account that has the highest value at the time. When the US dollar goes up they spend Dollars, when the Euro goes up they spend Euros. Plus being in Ukraine they get paid in all 4 currencies depending on who is renting their property. This allows them (and most other business) to do this.

Joel

 
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