If one wanted further confirmation that we now live in the era of “fictitious capital” this end of the year headline in today’s FT was a stunning reminder.
I am working on an article that applies the theory of fictitious capital to our understanding of corporate law. One way to begin to understand the issue is to ask: what was the real value of your investments or assets a year ago and what are they worth now. It is hard to think that they are really worth some ten percent less in any fundamental way.
But in retrospect they were clearly over valued. There was more fiction than fact than we had understood.