IDEAS home Printed from https://ideas.repec.org/a/sae/emeeco/v2y2010i1p21-44.html
   My bibliography  Save this article

Financial Wealth

Author

Listed:
  • Claudio M. Loser

    (Claudio Loser is President of Centennial Group, Latin America.)

  • Drew Arnold

    (Drew Arnold is a Student at Georgetown University and Summer Intern at Centennial and was in charge of the sometimes tedious, but essential statistical research.)

Abstract

Financial wealth over the last decades has become the clearest sign of economic advancement and well-being. The collapse of financial markets in the last 2 years has been a cataclysmic event. The loss of financial wealth has been enormous, and the consequences for the economies of the world are commensurate. The loss of capital value of financial assets worldwide may have reached US$50 trillion in 2008, the equivalent of 1 year of world gross domestic product or about one-quarter of total financial wealth before the crisis. While there has been some recovery so far in 2009, conditions under which financial markets have been operated for a few decades are unlikely to be replicated soon. The generation of wealth witnessed in recent years may come back, but in a much more sedate and controlled financial system, and subject to stricter rules. The impact of the current crisis has affected all regions of the world, showing that the decoupling theory that had been prevalent during earlier years was misplaced. There were particularly large declines in the case of Developing Asia and the European Union. This is explained by the impact of the decline in stock market values by almost one-half, and the reduction in the values of financial assets and higher spreads on debts. The decline had a direct effect on the performance of economies worldwide, with the decline in activity observed in 2009 of about 3 percent a year consistent with the loss of wealth described here. The implications of the loss of wealth, even if partially reversed, for the future are complex. It has been absolutely essential for governments to continue supporting demand, in the face of the existing collapse of private demand. However, the injection of liquidity and the rapid increase in government debt has a limit, to avoid a negative reaction by the public. Otherwise, the loss of wealth already experienced may be combined with increased inflation and a loss of confidence in public debt instruments that would aggravate rather than correct the existing level of economic distress.

Suggested Citation

  • Claudio M. Loser & Drew Arnold, 2010. "Financial Wealth," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 2(1), pages 21-44, January.
    • Handle: RePEc:sae:emeeco:v:2:y:2010:i:1:p:21-44
    DOI: 10.1177/097491010900200103
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/097491010900200103
    Download Restriction: no
    File URL: https://libkey.io/10.1177/097491010900200103?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Raphael Bostic & Stuart Gabriel & Gary Painter, 2008. "Housing Wealth, Financial Wealth, and Consumption: New Evidence from Micro Data - Revised," Working Paper 8525, USC Lusk Center for Real Estate.
    2. World Bank & International Monetary Fund, 2009. "Global Monitoring Report 2009 : A Development Emergency," World Bank Publications - Books, The World Bank Group, number 2625, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kenneth Harttgen & Stephan Klasen, 2010. "Fragility and MDG Progress: How useful is the Fragility Concept?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 41, Courant Research Centre PEG.
    2. Claudio M. Loser & Drew Arnold, 2013. "Financial Wealth: An Estimate of the Buildup and Destruction of Wealth 2002–2012," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 5(1), pages 31-40, January.
    3. Simone Bertoli & Elisa Ticci, 2012. "A Fragile Guideline to Development Assistance," Development Policy Review, Overseas Development Institute, vol. 30(2), pages 211-230, March.
    4. Fukuda-Parr, Sakiko & Greenstein, Joshua & Stewart, David, 2013. "How Should MDG Success and Failure be Judged: Faster Progress or Achieving the Targets?," World Development, Elsevier, vol. 41(C), pages 19-30.
    5. Mario Larch & Wolfgang Lechthaler, 2011. "Why `Buy American' is a bad idea but politicians still like it," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 838-858, August.
    6. Hanatani, Atsushi & Fuse, Kana, 2010. "Linking Resource Users’ Perceptions and Collective Action in Commons Management," Working Papers 24, JICA Research Institute.
    7. Usman, Muhammed A. & Mekonnen, Daniel A. & Kornher, Lukas & Braun, Joachim Von, 2021. "Effects of Short-Term Food Price Movements on Child Mortality: Evidence from Low- and Middle-Income Countries," 2021 Conference, August 17-31, 2021, Virtual 315112, International Association of Agricultural Economists.
    8. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014, December.
    9. Norman Miller & Liang Peng & Michael Sklarz, 2011. "House Prices and Economic Growth," The Journal of Real Estate Finance and Economics, Springer, vol. 42(4), pages 522-541, May.
    10. Zhao, Eric Yanfei & Lounsbury, Michael, 2016. "An institutional logics approach to social entrepreneurship: Market logic, religious diversity, and resource acquisition by microfinance organizations," Journal of Business Venturing, Elsevier, vol. 31(6), pages 643-662.
    11. Larch, Mario & Lechthaler, Wolfgang, 2011. "Is there a short-run case for protectionism? Trade policy and the business cycle," Kiel Working Papers 1717, Kiel Institute for the World Economy (IfW Kiel).
    12. Wee Chian Koh & Shu Yu, 2021. "A Decade After the 2009 Global Recession: Macroeconomic Developments," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 12(02), pages 1-24, June.
    13. Mary Hallward-Driemeier & Bob Rijkers & Andrew Waxman, 2017. "Do Employers' Responses to Crises Impact Men and Women Differently? Firm-level Evidence from Indonesia," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1018-1056, November.
    14. Ronald Mendoza & Nicholas Rees, 2009. "Infant Mortality During Economic Downturns and Recovery," Working papers 0904, UNICEF,Division of Policy and Strategy.
    15. Essers, Dennis, 2013. "South African labour market transitions during the global financial and economic crisis: Micro-level evidence from the NIDS panel and matched QLFS cross-sections," IOB Working Papers 2013.12, Universiteit Antwerpen, Institute of Development Policy (IOB).
    16. repec:ilo:ilowps:457693 is not listed on IDEAS
    17. Anis Chowdhury, 2012. "Structural Adjustment and Crises –Which Way Now?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(1), pages 85-118, April.
    18. Bernhard G. Gunter, 2010. "The Impact of Development on CO2 Emissions: A Case Study for Bangladesh until 2050," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 10, Bangladesh Development Research Center (BDRC).
    19. Paolo Pasimeni, 2013. "The Europe 2020 Index," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 110(2), pages 613-635, January.
    20. Ohnsorge, Franziska & Kose, M. Ayhan, 2020. "Emerging and Developing Economies: Ten Years After the Global Recession," CEPR Discussion Papers 14405, C.E.P.R. Discussion Papers.
    21. repec:unu:wpaper:wp2012-25 is not listed on IDEAS
    22. Anis Chowdhury & Iyanatul Islam, 2011. "A Critique of the Orthodox Approach to Indonesia's Growth and Employment Problems and Post Keynesian Alternatives," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(1), pages 269-299, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:emeeco:v:2:y:2010:i:1:p:21-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.emergingmarketsforum.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.