> By and large the destruction of fictitious capital just represents a
> redistribution to the claims on real wealth and not the destruction of
> wealth itself. However, when the collapse of these claims begins to affect
> the real economy then there can be a destruction of real wealth. A good
> example is the mortgage crisis leading to foreclosures. If it were just a
> mortgage crisis it would only be about who actually owns the property. The
> problem is when you have foreclosures and houses are abandoned they are
> vandalized or pipes break and real wealth, the house itself is effectively
> destroyed. This has become a big problem is cities like Cleveland.
>
> However, I think the point you were trying to make is generally true which
> is the decline in the value of financial assets in an of itself does not
> represent the destruction of real wealth.
>
> Rudy
Interesting point, but to what extent do you think this is likely to occur? Could large amounts of productive capacity also rot in obsolescence? I know it seems to be a bit of a hobbyhorse for me at the moment, but if China's output rates are dropping by almost a third then surely large amounts of productive capacity are going this way too.