WORLD'S BILLIONAIRES VANISHING-SIGN OF THE TIMES AS VALUES PLUNGE DUE TO DECLINING VALUES OF HOLDINGS-BILLIONAIRE COMMITS SUICIDE TO AVOID CREDITORS

Last year the world had 1,125 billionaires. Today there are 793. How $1.4 trillion vanished. NOBODY IS IMMUNE TO THE DOWNTURN.

Earlier this year, Adolf Merckle, Germany's fifth-richest man, opened the door of his modest home in Blaubeuren, Germany and stepped out into the frigid air. The 74-year-old outdoorsman was keen on taking long walks to clear his head. But when he hadn't returned home a few hours later, his family called the police.

Merckle had a lot on his mind. The secretive industrialist, who by our count had a net worth of $9.2 billion a year ago, was in financial straits. His holding company, VEM Group, had reportedly accumulated more than $6 billion in debt against its three biggest holdings: Phoenix Pharmahandel, the $28 billion (sales) pharmaceuticals manufacturer that had roots in a chemical company his grandfather founded in 1881; Ratiopharm, the generic drug maker Merckle had built from scratch; and cement producer HeidelbergCement. VEM was bleeding cash, and HeidelbergCement's share price was falling at an alarming rate. It became harder to manage his debt payments.

Hoping to make some quick cash, Merckle began gambling on risky short positions. In October he bet against Volkswagen--and lost an estimated $500 million when the shares quadrupled after Porsche revealed that it had amassed a controlling stake in the carmaker.

A month later he approached German bureaucrats in Baden-Württemberg and begged them for a $200 million bridge loan in a bid to save Phoenix Pharmahandel and Ratiopharm. They turned him down. Talks with banks continued. In early January his creditors gave him a $500 million loan. In exchange for the face-saving loan, he relinquished control of his empire. Trustees were appointed to oversee his assets.

Instead of taking a walk that cold night, Merckle drove to the suburb of Weiler, parked his car in the Ratiopharm lot and walked a few hundred yards to the train tracks that run past the plant. At 5:30 the conductor on an express train going from Ulm to Sigmaringen felt a bump and alerted authorities to investigate. Merckle's mangled corpse was found two hours later. The note he left behind reportedly read, "I'm sorry."

Like the rest of us, the richest people on the planet have endured a financial disaster. This year there are 793 people on our list of the World's Billionaires, a 30% decline from the 1,125 we counted up a year ago. Of the 752 who kept their ten-figure fortunes, 87% saw their personal balance sheets falter (6% gained; 7% held steady). Today the world's billionaires have a collective net worth of $2.4 trillion, down $2 trillion from a year ago. Among the billionaires on both lists, the collective wealth is down $1.4 trillion.
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It was hard to avoid the carnage, whether you were in stocks, commodities, real estate or currencies. Even people running fine businesses could have been killed by frozen credit markets, weak consumer spending or fraud.

"It's going to get worse," says David Geffen, who watched his net worth fall 25% to $4.5 billion as real estate and art prices softened. "I don't think we've hit the bottom. It wouldn't surprise me if the Dow fell below 6000. Unemployment is now 8.1%, which means it's really 13.1% after you add 5% for part-time workers and people who are no longer on the employment rolls. I think it will reach 15% or 16% by the end of the year."

Geffen claims he pulled his investments out of the market in 2006 and has sold off a third of his multibillion-dollar art collection. "It seemed that it was awfully easy to make money," he says. "There's something seriously wrong when it isn't extremely difficult to make a great deal of money. There were billionaires who could not qualify for The Forbes 400. That was one of many warning signs for me to get out."

The biggest loser in the world this year, by dollars, was last year's biggest gainer. India's Anil Ambani lost $31.9 billion--76% of his fortune--as shares of his Reliance Communications, Reliance Power and Reliance Capital all collapsed. Ambani is one of 24 Indian billionaires, all but one of whom are poorer than a year ago. Another 29 Indians lost their billionaire status entirely. India's stock market has fallen 44% in a year, global equity prices 39%.

Donald Trump, we estimate, has seen nearly half of his net worth disappear. His casino company is in bankruptcy--again. His $1 billion hotel and condo tower in Chicago hasn't closed enough previously agreed-to sales and can't find new buyers. Evidently having some difficulty making timely repayments of $640 million in unguaranteed construction loans from Deutsche Bank, he sued the lender last fall (but recently took the lawsuit off the table). As cranes stand idle above half-built residential real estate projects around the world, Trump's ability to profit from licensing his name and marketing expertise to other developers has become impossible to gauge--despite his popularity. "We're not going down; we're going up," says Trump. "We're buying things we couldn't have dreamed of buying two years ago. And we have a lot of cash."

The Donald always makes a few shrewd moves. Last May Trump sold a Palm Beach, Fla. house to Russian tycoon Dmitry Rybolovlev, who was worth $12.8 billion last year, for $100 million. In the months that followed, shares of the new homeowner's publicly traded fertilizer outfit, Uralkali, cratered, erasing three-quarters of his fortune. Trump dumped some of the cash he made into a few golf courses put on the block by their cash-strapped owners.

Rybolovlev was one of the lucky Russians who kept their billionaire status. Russia became the epicenter of the world's commodities bust, dropping 55 billionaires. Among them: Dmitry Pumpyansky, an industrialist from the resource-rich Ural mountain region, who lost $5 billion as shares of his pipe producer, TMK, sank 84%.

Last year Moscow overtook New York as the billionaire capital of the world, with 74 tycoons to New York's 71. Today there are 27 in Moscow and 55 in New York.

And as of late, New York State has had a lot of high profile defectors, those who are moving to lower tax sates like Florida or Nevada, or right out out of the country simply due to confiscatory tax policies.