I thought you supported globalization and capitalism? On 4/6/06, Gruss Gott wrote: > Abridged by me from: > > Buttonwood: View from the top > Mar 28th 2006 > From The Economist Global Agenda > > FROM his perch high in The Economist's tower in St James's, this > incarnation of Buttonwood has a splendid view of London's financial > elite at work and play. > > Ajay Kapur, global strategist at Citigroup, has coined the term > "plutonomy" to describe the phenomenon. The world, he says, is > splitting into two blocks: those rife with income inequality, whose > economies are essentially powered by the wealthy; and more egalitarian > places, such as Japan, France and the Netherlands, where there is less > incentive for entrepreneurial flair. > > Drawing on America's latest triennial Survey of Consumer Finances, > published last month by the Federal Reserve, Mr Kapur notes that in > 2004 the richest 10% of Americans scooped a staggering 43% of pre-tax > income and held 57% of net worth, up from 39% and 51% respectively in > 1995. The poorest 40% gathered just 10% of income in 2004, a little > less than their 11% in 1995. > > The skew of wealth in favour of the rich, argues Mr Kapur, answers > many of the questions that vex equity investors. Why, for instance, > haven't oil prices slowed the global economy? Because, he says, the > wealthy don't notice them. > > He also believes that the gap between the rich and the rest will widen > even more, as globalisation hands the people at the top an increasing > share of the world's GDP over the next few years. That means, he says, > that problems such as the low saving rate are unlikely to send the > dollar into free-fall or interest rates sharply higher. Thus the > equity risk premia reflecting such worries may be too high. > > http://www.economist.com/agenda/displaystory.cfm?story_id=E1_VGSSQPP
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