Recession Rich: Britain's Wealthiest Double Net Worth Since Crisis

[interestrateripoff]

http://www.theguardian.com/business/2015/apr/26/recession-rich-britains-wealthiest-double-net-worth-since-crisis

Britain’s billionaires have seen their net worth more than double since the recession, with the richest 1,000 families now controlling a total of £547bn.

While average UK incomes have yet to recover from the worst economic crisis since the Great Depression, with thousands still flocking to food banks, the financial elite have emerged not only with their fortunes intact, but holding a larger than ever slice of the cake.

Their assets have increased from £258bn in 2009, a rise of more than 112%, according to the 2015 Sunday Times Rich List. The past 12 months saw the biggest bounce for the UK super-rich in six years, and London now has 80 billionaires, up from 72 last year – more than any other world city.

Leading the pack for the first time is Ukrainian born petro-billionaire Len Blavatnik, whose London address is a £41m residence in Kensington Palace Gardens. Now a US citizen, Blavatnik gambled a third of his fortune on acquiring the ailing Warner Music empire four years ago, at a time when piracy was demolishing recorded music revenues.

Chin chin. I'm busy drinking my champers in celebration.

[scepticus]

I may get slated for saying this but I think this effect is simply a reflection of interest rates. Low rates, high asset prices.

While their net worth may have increased, their yield, their ability to live off that wealth at the same rate of expenditure they enjoyed before the crisis, has declined equivalently.

The gain in net worth is a one-off boon for the rich, the death of yield hamstrings them.

[Timak]

I may get slated for saying this but I think this effect is simply a reflection of interest rates. Low rates, high asset prices.

While their net worth may have increased, their yield, their ability to live off that wealth at the same rate of expenditure they enjoyed before the crisis, has declined equivalently.

The gain in net worth is a one-off boon for the rich, the death of yield hamstrings them.

Meh, they'll have to draw down on some of those hundreds of millions.

[XswampyX]

My heart bleeds for them.....

Can't they just borrow against the 'new' value of their assets and double down again?

You know. I paid 1000 for my house. It's now worth 2000. Take the 1000 out and use that to purchase another one, via a loan. Rinse and repeat, until I'm Mr Wilson.

The wealth is real.... for now.

[TwoWolves]

The low interest rate environment has allowed the wealthy to take out massive loans, because they have large collateral deposits to start with and with these loans purchase assets that are being inflated rapidly (because of this environment) and thus enjoy eye-watering risk free yield (courtesy of the central banks).

This whole crisis has been engineered to perform this stunning fraud. You have to be stupid to image this is accidental.

[Guest Jemmy Button]

The Guardian....let me repeat, The Guardian. Seriously who gives a monkeys what that biased paper says...the Guardian is as bad as the Daily Mail. In fact, I'd rather trust the Daily Mail more than the Guardian...

[wonderpup]

Is this a zero sum game or not? I can't decide. Obviously it's nonsense to think of this in terms of the super rich redirecting the income streams of the rest into their pockets directly- but are the distortions of which this is a symptom ultimately moving wealth away from the plebs and toward the rich?

Or are we seeing just a massive paper gain that is irrelevant to the economy as a whole- at least until this phantom money is destroyed at which point it does impact on the real economy?

What seems to have happened here is the fulfillment of a capitalists fantasy- they have found ways to create wealth that does not require the involvement of the real economy at all- after all when a CEO can increase his bonus simply by borrowing cheap money and using it to buy back his own companies shares he has created 'profit' from thin air- a far better proposition than investing that money in the production of goods and services that may not even sell.

[Guest Jemmy Button]

Edited April 26, 2015 by Jemmy Button

[XswampyX]

Is this a zero sum game or not? I can't decide. Obviously it's nonsense to think of this in terms of the super rich redirecting the income streams of the rest into their pockets directly- but are the distortions of which this is a symptom ultimately moving wealth away from the plebs and toward the rich?

Or are we seeing just a massive paper gain that is irrelevant to the economy as a whole- at least until this phantom money is destroyed at which point it does impact on the real economy?

What seems to have happened here is the fulfillment of a capitalists fantasy- they have found ways to create wealth that does not require the involvement of the real economy at all- after all when a CEO can increase his bonus simply by borrowing cheap money and using it to buy back his own companies shares he has created 'profit' from thin air- a far better proposition than investing that money in the production of goods and services that may not even sell.

You tell me? Print billions, inflate assets but don't destroy (too much) the value of money. That sounds like a plan to me. But of course it's a liquidity problem.... They have all the money and we don't!

Imagine you are in a company and they pay your bonus in shares, after 20 years you have 20 years of shares. I'm pretty high up in the company now, so I can then buy back 50% of the companys shares with borrowed money (by the company I still work for). I then end up with the value of 40 years worth of shares. You don't just increase your payment this year, but for every one of the last 20! I would do it.

[blackgoose]

What they fail to mention is that "Britain's wealthiest" also include all of those super rich foreigners that sometimes live in London. As time goes on, more and more oligarchs have moved to London, pushing British people out of the list of Britain's wealthiest, therefore increasing the wealth of Britain's wealthiest.

[crashmonitor]

What they fail to mention is that "Britain's wealthiest" also include all of those super rich foreigners that sometimes live in London. As time goes on, more and more oligarchs have moved to London, pushing British people out of the list of Britain's wealthiest, therefore increasing the wealth of Britain's wealthiest.

I'm guessing most of this 547 billion pounds is money appropriated form abroad....oil from Russia, profits from employees in the third world etc.

Possibly wrong to think the money has being taken from us, other then the effect on London property prices; which will be impacted beyond the type of property these foreigners would live in.

[Vested Disinterest]

Why aren't any banksters mentioned in the article? Is that because they aren't in the rich list (I haven't seen it) - or is it because it's easier to write about steel and vacuum cleaners?

[sPinwheel]

Such talent.