US households lose $11.1t of wealth in 2008

From Fazle Rashid | Published: March 14, 2009 00:00:00 | Updated: February 01, 2018 00:00:00

NEW YORK, March 13: The US households lost $5.1 trillion of their wealth in the last three months of 2008, worst in the past 57 years, the Federal Reserve revealed yesterday. The full year loss has been estimated at $11.1 trillion.

Most of the wealth was lost in financial assests like stocks. The Standard and Poor's ( S&P )500 stock index fell 25 per cent in the fourth quarter of 2008. Even the richest among the Americans have become a lot poorer, the New York Times (NYT) reported today. Forbes magazine's annual listing of the richest people in the world has always stirred excitement. Bill Gates, the owner of Microsoft still clings to the spot one. Gates wealth dropped to $18 billion from $40 billion. Warren Buffet another rich man saw his personal wealth reduced by $25 billion to $37 billion.

The top 20 per cent of income earners spend a lot more than the bottom 60 per cent, NYT quoted a study. The government's borrowing has increased at an annual rate of 37 percent. Borrowing by households has dropped by 2.0 per cent. The lending to businesses was up by 1.7 per cent.

The debate between US and European nations over what should be the priorities of the G20 nations " took a new turn " when France's central bank ( Banque de France ) governor said US needed to fix its own financial system rather pressing other countries to come up with fresh plans.

Stabilising financial markets everywhere is a condition for global recovery, a reputed paper quoted the France's central bank governor as saying.

Japan has firmly stood behind the US in underpinning the urgency of coordinated action to support the world economy rather than long-term efforts to financial sector regulations

The list of nations relaxing their vaunted bank secrecy rule is growing.

Switzerland, Hong Kong, and Singapore have all agreed to relax secrecy as the banks in these countries became the haven of tax dodgers and stolen government money. Liechtenstein has also agreed to relax its bank secrecy rules and accept standard set by Organisation for Economic Cooperation and Development (OECD).

In the political front, the US took an unusual move and stepped in directly to defuse the political tension now gripping Pakistan, Washington's close ally in its war against the Islamic Jihadists. US ambassador Ms Anne Patterson and the special envoy Richard Holbrooke both talked to President Zardari and opposition leader Nawaz Sharref.

The trouble in Pakistan erupted after court ruled Nawaz Sharref and his brother cannot hold elective office. Obama administration fears that the rising tension between political rivals could further derail Pakistan's effort to quell a growing insurgency.

The government of Pakistan has said it acted to restore law and order and subdue Sharif whom it accused of trying to foment revolution and court Islamists to buttress his power. Sharif supporter's said the government is trying to supress dissent, the NYT in a five column story said today.