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The Wealthiest Get Wealthier

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Well summed up IMO.


The Wealthiest get wealthier

from Golem XIV - Thoughts by golemxivg@googlemail.com (Golem XIV - Thoughts)

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.

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Well so much for the idea of trickle down of wealth.

To me, this isn't even about nation/states any longer. Its about the 5% of the richest in this world and the other 95% of us who are controlled by them competing for jobs/ land/ and food (in many cases).

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You know when you play monopoly and someone owns almost everything and you have little money and are just waiting for the game to come to a close.

That is where we are now.

Good analogy.

At least with Monopoly when the game is over you fold up the board and put it away. Get back to real life...

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The wealthiest getting wealthier is not ideal but acceptable, but only if it stops the poor getting poorer off the back of it......the wealthy rich should be feeding surplus back to the under privileged to maintain an equilibrium.....otherwise it will turn out to be failure all round. ;)

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It was ever thus.

It was mainly thus...but with some exceptions.

For the second half of the 20th century, in the west at least, inequality generally fell and living standards for most skyrocketed. It's not the only exception (if you were lucky enough to survive the black death and still be standing at the end of the 1300's you saw a big hike in your prospects) but it's an important exception because it's so recent and so dramatic that it's become the default expectation.

It's surprising how long it takes to realign expectations to reality. In the US real median incomes are unchanged since the late 1970's, but it's only now that Americans are questioning their asumption that their kids will be better of than themselves.

In the UK our median incomes have only flatlined since 2003 (well before the current crash), so based on the US experience it's likely to be a decade or two before we stop thinking something's broken and start shrugging our shoulders in acceptance of the Malthusiasian reality.

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  • 444 Brexit, House prices and Summer 2020

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