Blackstone CEO Stephen Schwarzman: 45 Percent of Wealth Destroyed

by Tina Kells | March 12, 2009 at 10:07 am

37 views | 0 Recommendations | 0 comments

Stephen Schwarzman, CEO of private equity company Blackstone Group told the Japan Society that between 40 and 45 percent of global wealth has been destroyed by the current economic collapse. Speaking at a conference Tuesday, Schwarzman stated that the magnitude of this destruction of wealth is "unprecedented in our lifetime."

"Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

Schwarzman stated some confidence in the measures being taken by governments around the world but cautioned that there would be more difficulties ahead. Blaming the credit rating agencies for plunging the planet into depression Schwarzman pointedly stated that accounting practices surrounding asset valuation had to change.

Rating companies have been the focus of intense criticism for their role in granting top "AAA" ratings for complex bonds that later plummeted in value, resulting in subsequent rating cuts, in many cases to junk status.

"Once you bought into ... the Triple A paper and it turned out to be paper that was in many situations going to end up defaulting, then you really had the makings of a global problem," he said.

Schwarzman said problems were then exacerbated by mark-to- market accounting rules. Those rules ask banks and other financial institutions to price assets at a value related to how they would be sold in the open market.