So who stole all that wealth

Assessing the Costs and Consequences of the 2007–09 Financial Crisis and Its Aftermath

Explaining the Output Loss The $6 trillion to $14 trillion base estimate of lost output following the crisis depends on assumptions about the economy’s trend rate of growth and whether an oil-price shock in 2008 might have caused a mild recession anyway.[3] This estimate of the aggregate cost of the crisis covers 2008 to 2023, when output is assumed to fully return to trend. Ultimately, there is no way to know for sure what path output would have followed or even if the financial crisis caused the output drop. The standard assumption is that trend growth would have continued at a pace similar to that in the preceding period. From 1984 to 2007—a period often referred to as the Great Moderation due to its relative economic and price stability—the average annual growth rate of gross domestic product (GDP) per capita was 2.1 percent. Conceivably, historically high crude oil prices were partly responsible for the contraction that followed, and trend growth overstates what output would have been. The cause of the oil shock, however, may be inseparable from the roots of the financial crisis. A global-imbalances narrative posits that an influx of overseas demand for U.S. financial assets fueled an unsustainable creation of structured credit products (financial instruments such as mortgage-backed securities) that pushed real (inflation adjusted) interest rates lower. This connection between financial flows and various hard-asset commodity prices—including the crude oil price spike—sowed seeds of instability in 2007–08.

So hold on there a moment. The author reviews two possible crash causes, financial misregulation and a sudden oil shortage.

I happen to believe in the oil shortage, but lets work with the assumption that financial mismanagement caused the great recession. First, the mechanism, I assume, is the loss of housing wealth by the middle class due to the housing bubble and crash. Now, hold on, lets first look at the actual losses in the housing industry, total. Currently there is a shortage of housing lots, and no land was destroyed in the housing crash. Second, there were only a few instances of actual destruction partial or unsold housing. Where exactly were the physical losses, the rotted fruit, in the housing industry? None, zero, nowhere. So how did all those middle class folks lose wealth? Answer that, under the assumption this author makes, and you have a causis beli, a valid reason to dismember the union.