Those who follow Wall Street and the stock markets closely would have noticed the epic fall of the top 400’s richest people. This week, the world’s richest people lost almost a staggering combined fortune of $194 billion. The blame was largely rested upon China’s shoulders with their economic decline and the low oil prices.
Amazon.com founder Jeff Bezos lost the most, watching his fortune drop off by $5.9 billion, while Bill Gates witnessed his wealth take a dive in profits by $4.5 billion. The combined losses of $3.7 trillion this week have equated closely to Germany’s GDP.
But what happens to the money lost? Where does it go? It’s an age old question that never seems to find an answer.
You can talk about the stock markets in terms and meanings, risks, assets, floating a company, going public with sales, and so forth. Needless to say, Wall Street and his associates are a complex game to anyone outside the loop. The million dollar question (mind the pun): can the markets be manipulated to the whims of government?
Theory One – the Pragmatic Approach
The Crash of 1929 is a prime example of fluctuating markets – mainstream suggests several clear trends that lead to the crash: rampant speculation, booming markets that continued to rise quickly, deals leveraging too much stock without physical backups (the imagined stock); hence the bubble getting too big and bursting.
End result: over $25 billion wiped from the market in one day ($319 billion in today’s dollars).
Theory Two – the Not-So-Pragmatic Approach
The fringe story – central banking forces purposely triggered the collapse so that they could buy up stocks for “pennies on the dollar.” Why? Self-interests and control over the markets. If this is true…who, and why?
Firstly, probability suggests that the Federal Reserve are more inclined to prop markets accordingly to their schedules. If they were considered part of the Treasury and subjected to their rules, the more the better; but they aren’t. The ‘fifth column’ of the government, the Fed, aren’t as independent as some believe. If the Fed were to withdraw from the markets tomorrow, would everything come crashing down?
The ‘What If’ Approach – Hypothetically Speaking…
Money doesn’t just disappear into thin air…or does it?
This week we witnessed 194 billion wiped from the markets. Eight weeks ago the GCC announced contracts expected to reach 194 billion for Middle East infrastructure contracts – a quarter of their total worth. The GCC countries: Kuwait, Bahrain, Oman, Oatar, Saudi Arabia and the UAE have had strong ties with the US since 1933.
The US-GCC relationship endeavors to “build on [the] meeting of minds, pursuing strong strategic relationships with countries throughout the Gulf, as it has helped to develop and increasingly defend the region’s energy resources [predominately oil].” The document further relates to Iraq’s invasion into Kuwait and the Gulf War, September 11 attacks, and…
“2004 forecasts by some geologists and financial advisers that world oil reserves had either already peaked or would soon do so, contributing, along with the chaos and uncertainties associated with the U.S. invasions and occupations of Afghanistan and Iraq, to $60 a barrel.”
But how unlikely the U.S. higher powers would divert funds to their GCC counterparts to secure the invested region’s grasp on a dwindling oil supply. It just wouldn’t happen.