Wealth Inequality Accelerates to Worst Level in History
. . .David Rubenstein has doubled his fortune since 2009. Jamie Dimon has more than tripled his net worth. And Stephen Schwarzman has increased his wealth six-fold.It’s a remarkable showing given the economic and political tumult of the past decade, from Lehman Brothers to Brexit to Donald Trump. The fortunes of a dozen 2009 Davos attendees have soared by a combined US$175 billion, even as median U.S. household wealth has stagnated, a Bloomberg analysis found.
The data illustrate the ever-widening gap between the true haves—those in the 0.1 percent—and the have-nots of a global economy. Data from UBS and PwC Billionaires Insights reports show that global billionaire wealth has grown from $3.4 trillion in 2009 to $8.9 trillion in 2017.Central bank actions to fight the financial crisis—record low interest rates and bond-buying programs—have underpinned this ballooning wealth by driving up the prices of stocks and other assets.“Ten years ago, ironically at the lows of the market, what you wanted to own was capital and if you did own capital you did incredibly well,” said Michael Hartnett, Bank of America Corp.’s chief investment strategist. . .
For those with minimal or no assets, it’s been a more challenging decade. Wages have stagnated and while equity markets have risen, fewer U.S. adults are invested in the stock market than in 2009. Compensation for chief executive officers in America’s largest firms is now 312 times the annual average pay of the typical worker, compared with about 200 times in 2009, 58 times in 1989 and 20 times in 1965, according to a 2018 report by the Economic Policy Institute.
The recent turmoil in the stock markets means some attendees may have discomfiting flashbacks to 2009. U.S. stocks in 2018 had their worst year since the financial crisis while oil ended the year mired in its steepest quarterly slump since 2014. And plenty of risks loom this year, from the U.K.’s impending exit from the European Union to U.S.-China trade talks and the continuing showdown between President Donald Trump and Congress over the budget.
It’s possible this means Davos Man has peaked. Bank of America’s Hartnett detects a transition in which “Joe Six Pack” will benefit relatively more as central banks withdraw easy money, populist politicians win at the ballot box and nationalism tops globalization. (Read more from “Wealth Inequality Accelerates to Worst Level in History” HERE)
Follow Joe Miller on Twitter HERE and Facebook HERE
