Rich NOT 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.

http://pensionpulse.blogspot.com/2009/08/end-of-30-year-wealth-bubble.html

http://elsa.berkeley.edu/~saez/saez-UStopincomes-2007.pdf

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 banker's 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!!

http://www.nytimes.com/2009/08/22/business/economy/22fed.html?_r=1&hp

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?

http://www.vi.is/files/555877819Financial%20Stability%20in%20Iceland%20Screen%20Version.pdf

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

http://www.financialarmageddon.com/2009/08/economic-no-spin-zone.html

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:

http://www.nytimes.com/2009/08/22/business/economy/22charts.html?ref=business

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 . . ..

http://online.wsj.com/article/SB125088307063549883.html

Disclosures: None.