The Rich Aren't Getting Richer

This would seem obvious, but the rich are by-and-large getting poorer. Apparently nearly everyone else is too, but the rich are facing the great equalizer - the worst recession since the Great Depression. The guy who developed McAfee antivirus software went from over $100 million to $4 million in a couple of years. Apparently not smart enough to use antivirus on his investments. If you have that much money, stick it in Treasuries and enjoy life. Unless you are a total fool, you will not outlive your money. Leaving it in the stock market, apparently you might out live it. Then again, I would like to have the $4 million he has left. And then again again, he seems to be living life quite well with a lot of traveling and life experiences.

By the way, this link has another interesting tidbit of info. The top ten thousand money-wise in the U.S. apparently used to be in the $2 million and up range in the 1970s (adjusted for inflation) and in the $11.5 million and up range in 2007. Now they are down to $6-8 million range and up today. A few more years like this and I can make the top 100 million. Still, these stats demonstrate the inequalities that arose in large part (not exclusively) during the Bush administration. For the filthy rich to experience a five-fold increase in wealth over 40 years while those in the lower and middle class actually saw an inflation adjusted decrease in wages is horrendous and, I might add, not sustainable. Better income distribution leads to a better sustainable economy.

A second tidbit worth noting in this story is that the stock market, before the recent decline, was on pretty much a 20 year tear (Nasdaq aside). Now it is torn and the holes are showing. Nonetheless, it has climbed quickly and significantly from its March 9 low. Where will it go from here? I am short (and that is not a comment on my height).

We are just so fantastic at stopping a recession!! How can I slap myself on the back even harder?!

The world bankers' lovefest in Jackson Hole, Wyoming is something I ask you to burn in your memory and remember for the next year. It seems all the central bankers are climbing over each other to claim credit for this recession being put behind us. How brilliant we all are!!

Yep, recession ended, housing up and the market reacts accordingly. One speaker quoted in the linked piece is Frederic Mishkin of Columbia University. As Dean Baker points out, Mishkin had some timely remarks on Iceland a couple of years ago. Seems the now defunct country was thriving at the time and Mishkin saw continuing roses on its horizon. So, I ask, why does anyone quote him or pay attention to him anymore? Then again, why does anyone listen to central bankers anymore? Then again, why ask why?

And why does anyone believe the folks in Jackson A-Hole about where the economy is heading. Apparently Main Street is not buying it.

But Main Street needs to get real too. Those on Main Street need to wake up and smell the mocha. If you believe the U.S. government is going to spend us out of this decline and China will finance the effort by buying Treasuries, you better think again. Maybe China is not so much behind the effort.

Fox to Sheep: "No I don't know where the lost sheep went."

Geithner is telling us that government officials dealt properly with Goldman Sachs and did nothing improper to support them. Yep, from his lips to my . . ..

Disclosures: None.

Comments

[notsosmart]

who do you trust? this-my question,i ask now & then,goes unanswered. its all bs & the talking heads know it.too bad the sheeples cant figure it out.the fleecing will continue.the scoundrels meet @ vacation spots all over paid by taxpayers & the media report the bs never mentioning that these are the folks who caused this mess.too bad we dont have a queen of hearts as it would be"off with their heads". i fear the heads would keep talking even after the separation. i pay no attention to these self serving phonies.i watch family guy & at least get a laugh from this nonsense.the ponzi/casino wall st is for insiders.

2009 Aug 23 11:38 AM

[Dave Wrixon]

Sorry, I stopped reading when I got to "Stick to Treasuries". Only a fool would lend to the US Government at a pittance at this stage of the game.

2009 Aug 23 12:00 PM

[socrateazz]

Interesting. The problem I see is that over the last twenty years, The balance of income became more and more unbalanced. Those who are poor and without a well paying job are hurting badly. Those with a reasonable job and some accumulated wealth think they are hurting badly. And those who collect wealth believe they are hurting. But to the poor, the psychological hurting is nothing compared to the reality of not having what you need. On the plus side there is help for the poor. But not much if the poor want to move up! Most wealth is in assets. If the value of the assets increase, suddenly you are wealthier. If the value of those assets decrease then you are poorer. Assets have generally decreased in value due to a decline in abillity and desire to own them. Will that change? As long as employment and pay does not substancially change, there will not be as many assets purchased, thus not helping the value of those assets. Value is determined by the difference in number of those wishing to divest themselves of an asset and those wishing to possess such an asset. Any collectable is only worth what somebody else wants to pay!

2009 Aug 23 04:01 PM

[Roger Knights]

"Then again, why ask why?"

The answer is WY. (I suspect the market was goosed a bit to dispel any thunderclouds over the WY confab.)

2009 Aug 23 04:17 PM

[Ed Christ]

My heart bleeds for Mr McAfee. Between March and this week, my net worth has doubled, which sounds pretty good until you consider in the preceding six month it lost 50% of its value. Which, if you take the time to consider the math, means I'm right back where I started a year ago. Yeah me.

2009 Aug 23 07:53 PM

[Old Trader]

"It seems all the central bankers are climbing over each other to claim credit for this recession being put behind us. How brilliant we all are!!"

Actually, Trichet, head of the ECB, had some words of caution, despite the better than expected GDP numbers out of France and Germany recently.

2009 Aug 24 05:16 PM