Much of the wealth in the world is not specifically calculable. Rather, it is based on market demand. So when that demand drops, the value drops regardless of the cost of the inventory or construction costs.
More simply put, for example: millions of people were borrowing money against their house's equity. As their house values increased, they borrowed more and more money -- often running up obligations (credit cards, etc.) and paying for those obligations with more home equity loans as their homes increased in value. As soon as that balance was wrecked by reckless loan standards and defaults from buyers who should have never been loaned money it all came down. Each time someone defaults on a loan or HAS to sell their house at any price (usually deeply discounted) the value of ALL houses drops. The more foreclosures and sales, the harder it is to get fair value for your own house. If your street has 5 people desperate to sell their homes the price of all homes in your neighborhood plummets, and you can no longer borrow against your home. I many cases you can no longer even sell your home for what you owe on it and are "upside down."
To show you how deeply seated that borrowing mentality became, the savings rate of Americans was actually a negative number most of the last several years. That means Americans were spending more than they made and made ends meet through credit.
So, with the global economy increasingly based on credit, more and more of the wealth in the world is "PAPER" wealth, not real wealth.
The only solution is to personally resolve to completely eliminate any unsustainable debt in your own life. The attitude toward consumerism and especially the sense of entitlement of most Americans is pretty disgusting when you really analyze it.
