Monday, March 4, 2013

Peak Greed

Robbed By a Bank
No surprise, following the hold-up of the middle class known as the bailout of 2008, subsequently, the middle class has become ever-more marginalized by the very same people they bailed out; meanwhile, the wealth of the ultra-rich has never been higher. Just today we learned that the number of global billionaires hit a new all time high...

Bernankenstein: Take from the Poor, Give to the Rich
According to the latest Forbes list, a record 1,426 billionaires are now worth $5.4 trillion. According to the article, "The driving force behind all this wealth is resurgent asset prices". And of course, the driving force behind asset prices is Bernankenstein and his global Central Bank brethren. Somewhat coincidentally, $5 trillion is the amount that the U.S. debt has increased in the past four years, as profit margins hit an all time high, so it should come as no surprise that all of the extra "fiscal stimulus" fell straight into the pockets of the ultra-wealthy.

There are 200 more billionaires this year than 2012, which itself was a record breaking year, meanwhile, the middle class gets stuck with ever-increasing government debt and higher taxes.

What does the middle class get from Central Bank policies? Higher cost of living in the form of food and gasoline. Which of course puts more downward pressure on wages as companies look to cut other costs to offset the increased commodities prices. Here below is gasoline up 20% since just December. Remember those food riots that were widespread across the developing world a couple of years ago? Those all coincided with Central Bank liquidity programs that boosted commodities by reducing futures carrying costs, which then fed back into spot food prices via arbitrage. Yes, Central Banks squeeze the malnourished to further enrich the ultra wealthy, for whom elevated commodity prices appear as yet another higher valued asset on their brokerage statements.

Peak Billionaires
There are 10 times as many billionaires now as there were in 1987 - and, that's not all due to inflation. The dollar lost half its value in that timeframe, not 90% of its value. The only real inflation is in concentration of wealth. This widening divergence in wealth between the ultra-wealthy and the ever-increasing ranks of the poor, will not continue indefinitely. Of that, history is certain...