A message from the billionaires….

Wednesday, 27th February 2019

A message from the billionaires….

You know who I feel sorry for?

The world’s billionaires….

All 2,208 of the blighters (figure from Forbes)….

The richest fractional percentile of the world’s population has got it tough….

They get the blame for everything….

  • Playing a good hand of cards….

We must remember that the billionaire didn’t necessarily ask to be part of the global financial elite….

He can’t help it if – as a result of his powers of intellect, creativity, innovation, technical expertise, capacity for hard work, tolerance to risk and out-and-out criminality (only one or two bad eggs!) – the world has rewarded him so generously….

He can’t be blamed if – as has happened – he got richer over the last decade of cheap and easy credit whilst everybody else got poorer….

The billionaire is like any other player at the table. He can only play the cards the universe has delivered into his hands….

And he must play that hand as best he can – to his own ends and advantage….

Which of us would not set out to do the same?

  • Doing good out in the world….

But few people these days have sympathy for – or empathy with – the plight of the common-garden billionaire….

Instead of being showered with accolades for his splendid achievements, it is the brickbats that fly most readily in his direction as he lounges on a super-yacht out in the Mediterranean surrounded by a glut of scantily-dressed supermodels….

In January, billionaires, business leaders, senior politicians and the biggest players among the global elite gathered together in Davos, Switzerland, at a meeting of the World Economic Forum….

These good people came together (we are told) in a shared spirit of unvarnished  altruism – on their own time and coin – to discuss the most pressing problems facing the world and how best to deal with these things for the benefit of all mankind….

Can you imagine the average dustbin man or mechanic taking time out of his busy schedule to help his fellow man so? Me neither….

But what thanks did the billionaires and their placemen get? None….

Instead they were confronted by an uppity world-improver called Rutger Bregman who told them to quit talking about how much good they would like to do and to start paying their fair share of taxes….

‘I hear people talking the language of participation, justice, equality and transparency but almost no one raises the real issue of tax avoidance, right? And of the rich just not paying their fair share….’

The sheer impertinence of it….

  • They have their uses….

Billionaires divide opinion. No doubt….

Some folk think they are demons running amok. Others think of them as out-and-out sociopaths going through life playing with a stacked deck….

It hardly matters which camp you fall into. Because, whatever you think, billionaires do sometimes serve a useful purpose for the rest of us….

And they are serving just such a  purpose right now – delivering a message of great clarity that cuts through a swathe of otherwise confusing and contradictory signals….

Nobody seems to know what is going on….

Fewer still have any clue as to what is going to happen next….

And those that believe they do have an idea are frequently working with data, opinions and forecasts that are squarely at odds with one another….

I only need look at notes on my desk jotter for a quick-and-easy illustration of what I mean….

  • Mixed messages….

Here, randomly, without proper chronology and in no order of relative importance, are just a few of the mixed messages I’ve received this week from the many and varied places I go to do my reading….

The Dow Jones Industrial Average has gone up for nine straight weeks. It’s all the way back up above 26,000. The Dow had looked bearish at the back end of last year – but not so now….

Meanwhile, David Stockman, top economic adviser under President Reagan, says a day of reckoning has arrived for the stock market. In an interview on Fox Business he said, ‘We need to wake up and smell the roses here….’

A survey conducted by the National Association for Business Economics in the US reveals that 75% of business economists expect the US to enter a recession by the end of 2021….

Quite a few commentators are advising investors to keep an eye on the price of copper. The world’s third most-used industrial metal has many applications across the economy. If demand continues and the price increases  – so the argument goes – the renewed bull market might continue to stride on….

South Korean exports – a data point that is seen as a barometer of global financial health – fell in January and fell again in February….

Kevin Kelly at Benchmark Investments suggests keeping an eye on Boeing stock. Boeing represents 10% of the Dow Jones index and is a perfect example of a stock that is subject to the whims of trade, tariffs and a strong dollar (all current issues). The idea is that if Boeing ‘goes’, then the Dow Jones and the rest of the market will ‘go’ too.  Boeing stock recently climbed to an all-time high….

  • Trust the billionaires for direction….

Has all that information enabled you to form a clear view of where the world is today and where it is going tomorrow?

Or are you, like me, more confused than you were before you started reading?

Fortunately, the billionaires give direction….

It is not so much what they have to say. But more about something that they serve to illustrate – unknowingly and unwittingly….

It is not their intention to give us a message. But they do, nevertheless. A clear message….

And my best guess would be that, as a group, they wouldn’t much like the gist of the message they have to give….

But here goes….

  • Approaching a tipping point?

A new study published by Gabriel Zucman, an economics professor at the University of California, has something to tell us about the super-rich folk in America….

The top 0.1% of the richest adults in the US currently own 20% of total US household wealth….

That’s up from under 10% in the 1970s and the figures tell us clearly that the rich have been getting richer throughout the last 40-odd years….

Paid-up members of the billionaire fan club will no doubt be delighted with those numbers. But it’s a little too early – or maybe a little too late – to start with the celebrations….

The figure is headed towards the all-time high of just under 25% –  a  figure recorded all the way back in 1929….

That’s a significant year, of course. It was the year that Wall Street crashed – ushering in the period known as the Great Depression….

The super-rich had never been richer when the 1929 crash came. And right now, the super-rich are richer than at any time since….

It may mean nothing. There may be no cause for alarm – for us or for the billionaires….

There may well be no direct correlation between how rich the rich are in proportion to the rest of us and when the biggest economic and/or market crashes occur….

Or maybe the two things are directly linked – subject to correction when both get too far out of kilter at the same time….

We can’t know. Not for sure….

We can only speculate and observe….

But how much richer the billionaires get going forward compared to the rest of us is of great interest and potentially of great consequence….

We’ll be sure to keep track of things and report as we go….

That’s the truth of it as we see it….

All the best,

Dave Gibson

Money Truths