A study by Boston Consulting Group on global wealth and who has it, reported by Bloomberg, under the headline “World’s Wealthy Rose by 12% on Market Gains”. And there you have it, the truth of the last year encapsulated in 8 words.
According to Peter Damisch, head of the firm’s wealth-management practice in Zurich,
“Wealth became more concentrated, with millionaire households controlling 39 percent of the world’s assets, up from 37 percent a year earlier,…”
The wealthiest increased their wealth by 2% in a single year. And not just any year. That same year the cost of Wheat futures went up 91%, spurring uprisings across North Africa and the Middle East. Also the same year that the number of Americans having to rely on food stamps to feed themselves reached 44 Million.
The study went on,
“We have seen a growth from 2008 to 2010 that matches the growth from 2005 to 2007,..But the growth from 2008 to 2010 was driven by the recovery of equity markets and much less by the generation of new wealth.”
There’s they key. The wealthy, who got richer, didn’t do so by being generating new wealth, they did it by taking the wealth of those who were already poorer. That is what the bail outs, sovereign borrowing and QE mean.
From 2005 we were the property and lending bubble years. From which we passed directly to the Sovereign borrowing and commodities bubble. In the first bubble banks lent unwisely to fuel a speculative bubble in property. Today banks have advised Nations to lend unwisely to fuel a new bubble. And the people who profited from the first bubble are profiting from the second. The people who are now being forced to pay off the debts of the first bubble are about to be told they will also have to pay off the debts of the second one.
And how big is the new bubble? The study found,
Global assets under management rose by 8 percent to $121.8 trillion in 2010, beating the study’s previous peak of $111.8 trillion in 2007. The U.S. and Canada had the greatest absolute gain, climbing $3.6 trillion to $38.2 trillion
8% of $121.8 Trillion is $9.7 Trillion in new ‘assests under management’. That is not just a few lucky people rising to the ranks of millionaires to prove that anyone can make it. $9.7 trillion is rather similar to what government’s have pumped in to the global financial system. Global ‘assets’ go up and so does the US debt ceiling. Coincidence?
Remember those new assets are not yours and mine. We are in debt. Those assets are mostly owned by that 1% at the top.
Is it coincidence that from 2007 to 2010 when the wealthiest not only recovered their wealth but increased it at a rate which matched the bubble years of 2005-07, that at the bottom of pyramid, food stamp use in the nation which saw the greatest gains for the wealthiest, America, went from 26 to 44 million people?
While the rich got richer 18 million Americans were reduced to food stamps to feed themselves.
How are we going to get out of this? If our government’s have their way, we won’t. We will continue to be press ganged in to serving the interests of the wealthiest. From whose ranks our political leaders are either drawn by birth or to who ranks they hope to be elevated for services rendered.
Take what is going on in Ireland. Ireland is going to once again need another bailout. Not for its people, but for banks its people no longer have any money in. And what is the response of the experts? In an article in the Irish Independent,
OECD official Patrick Lenain said “best practice” was for benefits to be reduced over time.
You got it. Best practice is more cuts for the feckless who are unemployed because they can’t be arsed to go and get one of the many, many jobs the wealthy have kindly created for them. Who is this expert who feels he can tell the Irish what is best practice? M Lenain used to work at the IMF.
He is a well educated ideological cretin. Slightly harsh you might think. In 2007 M. Lenain wrote a paper for the OECD entitled, “Enhancing the Benefits of Financial Liberalisation in Belgium” This was 2007 remember. The collapse had already started and many warning had been given by insiders. Nevertheless M Lenain wrote,
The Belgian financial landscape has been transformed over the past two decades and now consists of a relatively large, well-functioning and internationally integrated financial sector contributing directly and indirectly, through its intermediary function, to long-term economic growth.
Just before all Belgium’s largest banks imploded and had to have absolutely colossal bail outs from everyone including the US. Yet, as this was already starting to happen M Lenain went on to tell us,
Competition may also be hindered by regulatory policies in the markets of mortgage loans and consumer credit; although these policies aim at protecting consumers against the risk of over-indebtedness, they risk having the unintended consequence of increasing entry costs for new providers, thus hindering competition and innovation and hurting consumer interests.
Yes, that’s it M. Lenain of the IMF and now the OECD, too much regulation might be a problem and why worry about stopping people getting in to too much debt. M Lenain still feels he has the right top lecture you about what would be “best practice’ and our politicians listen to him.
There is no hope in our present political class and system.
I don't doubt that a wealthy elite are profitting from our austerity-induced misery, but let's be careful with methodology. The measure we're using here is US$ millionaire households worldwide, right? How much of this change can be explained by a fall in the value of the dollar, leading to a higher number of millionaire households simply because "millionaire" doesn't mean as much as it used to in real terms? I don't know how much of the 12% increase in the number of millionaire households can be explained that way, but it must be a factor.
It's also worth noting that although the number of millionaire households rose by 12%, their share of the world's wealth rose by only 2%. Surely that means that millionaires individually have a *smaller* share of the world's wealth than before?
@magicalsushi
The measure they're using from the article seems to be worldwide millionaire households and mainly the increase is driven from Singapore it seems, Although the US still has the highest number of millionaire households in total.
And to qualify you need investable assets of 1 million, excluding property and things like art so if you didn't have a million dollars to invest last year and you hadn't aquired any more money then the falling dollar is not going to push you up on to this list.
disclaimer : I think! I'm no genius on this. which is why I enjoy this blog so much
This is good. Now Heaven won't be so crowded.
I wwould describe this article as proof of theft but of course we all know that as it's the bankers that own the people who write the laws, it follows they can't break them. In the USA they are frantically trying to amend the law of foreclosure, allowing the banks to act how they want. sadly I think they'll succeed.
In the meantime ther Fed is plundering pensions to get round the debt ceiling being breached. In the UK the banks stick two fingers up at the coalition and refuse to lend under the Merlin deal.
Still I take great reassurance that this fabulous new found wealth is all for the benefit of "grannies and orphans" and that it will "trickle down" to make us all richer.
Please don't laugh at my last paragraph, there are still deluded people who seriously believe this.
bill40
Further evidence that this article is spot on can be found here. http://www.zerohedge.com/article/attention-marxists-labors-share-national-income-drops-lowest-history
The share of labour wages has plummeted in the USA and I never thought I'd live to see the day when even the guys at Zerohedge concede the marxists may have a point.
Can these figures be compiled for the UK? I am off to investigate this but does anyone know? Please post if so.
Political stasis by dummies – the biggest growth industry on earth.
Professor Michael Hudson tells it like it is…in his latest piece
http://www.informationclearinghouse.info/article28245.htm
"Replacing Economic Democracy with Fianancial Oligarchy"
Most of the way there I think?
SOT I Wanna Be An Unf$£ker
mikehall, excellent link to the impressive Michael Hudson.
In the article he quotes Prof. Bill Black asking a question which I am sure puzzles many:
"“One of the great paradoxes is that the periphery’s generally left-wing governments adopted so enthusiastically the ECB’s ultra-right wing economic nostrums – austerity is an appropriate response to a great recession. … Why left-wing parties embrace the advice of the ultra-right wing economists whose anti-regulatory dogmas helped cause the crisis is one of the great mysteries of life. Their policies are self-destructive to the economy and suicidal politically.”
Thanks to a post on CiF this w/e, I came across this snippet in a 2001 Jon Ronson interview with Denis Healey about the Bilderberg conference:
"He said, "Bilderberg is a way of bringing together politicians, industrialists, financiers and journalists. Politics should involve people who aren't politicians. We make a point of getting along younger politicians who are obviously rising, to bring them together with financiers and industrialists who offer them wise words. It increases the chance of having a sensible global policy."
"Does going help your career?" I asked.
"Oh yes," he said. Then he added, "Your new understanding of the world will certainly help your career."
http://www.guardian.co.uk/books/2001/mar/10/extract1
Perhaps that explains the capitulation of the European leftist leaders to the international financial oligarchy?
In other words, straight out of the horse's mouth, they were "got at" years ago?
Mr Shigemitsu, don't doubt yourself bro.
There is no need for a question mark at the end.
They all were "got at" years ago. The simple proof of this is that it wouldn't all be f'd now if they hadn't. I know we all like to give the benefit of doubt.
Just not for them anymore.
I can see a song in that but it's so far away in my mind I can't even hear it. Benefit of Doubt has a nice ring though. They be cutting benefits so I suggest we all do the same.
Thanks for all you do to keep us informed.
May I blogroll you?
Suzan,
I'd be very pleased if you did. Thank you.
Hello folks. Just got back.
@ MrShigemitsu
I totally agree with your comment there. Very timely to mention the Bilderburgers too, as they're meeting this coming weekend in St Moritz.
IMO it's very much a case of a steady, inexorable process over time of 'capture' of people & institutions that are supposed to operate in the wider, majority public interest – but don't.
This is precisely the purpose of Bilderburg. Very, very powerful & wealthy people spending a considerable concentration of time, with complete confidentiality, to persuade & assess the amenability of politicians likely to rise to power, to their views. Kissinger, Rockefeller & co. must have wet themselves in joy when one T Blair attended Bilderburg in '94, already a top candidate for the UK Labour party leadership.
Nick Davies in his book 'Flat Earth News' talked about this process in Journalism at the Guardian. Career advancement depended on being careful to avoid certain avenues of analysis that the 'facts' would otherwise plainly indicate. It was most often a subtle process. And of course, such a process inherently has a positive, reinforcing feedback loop. Subsequent supervising editors refining the process further at each appointment.
The results of this are the stuff of medialens.org superbly written & incisive critiques of the supposedly more 'balanced' & 'intelligent' end of the journalism spectrum – Broadsheets & the BBC.
There's no doubt whatever that a similar process has taken place in the economics profession & civil service. Tho' it is perhaps most damaging of all in that suppsed last barrier to 'capture' – the 'fourth estate'.
This is the 'groupthink' that Nyberg mentioned, but didn't elaborate on, in is otherwise feeble report on Ireland's banking fiasco.
I watched that BBC News interview a couple of days ago with some Tory finance MP & an Open University economics professor who had just published a report critical of the 'austerity' policy to reduce the budget defecit. A key question, repeated after the Tory clearly didn't understand the concept – "…yes, but where is the actual 'demand' going to come from for those new private sector jobs/production to be needed to 'supply'…?" Again, the gormless, but TV attractive female BBC News interviewer clearly did not understand the purpose of this one & only vital & most important question on the issue, & failed to press the Tory for a sensible answer. I've seen Kirsty Wark of BBC supposed flagship current affairs program, Newsnight, doing exactly the same thing. She clearly has not the slightest notion of the basic economics arguments or theory. Pathetic, but she's laughing all the way to the bank, as are her fellow presenters & producers.
Another snippet of evidence for this process of narrowing the views & background of UK journalists is the dramatic increase in proportion of ex 'public' school (ie private education) pupils compared to 3 or 4 decades ago. Approaching 50% now. Political leadership, of any hue, I don't doubt is similarly afflicted. So much for social mobility & equality of opportunity.
As has been posted here recently, the worlds few percent 'wealthy' have been barely affected by the financial crisis, recession & thinly disguised, ideologically based 'solutions'.
As I've said before, 'democracy' – as in the interests of the majority – does not exist any longer. If, in any real way, it ever has.