You have all been reading about the times of economic hardship that lie ahead for all of us. But there is a silver lining to this cloud. As a result of the global financial meltdown, the rich poor income gap that according to a study from the OECD had been growing in the last 20 years, is now rapidly shrinking.
Why? Because the people who are well off are far more exposed to the financial crisis than the average person. Just as a rising market made the rich richer, the fastest falling market in 80 years, is making the rich less rich at the fastest rate in 80 years. Forbes recalculated its Forbes 400 list at the beginning of October and 17 billionaires lost more than $1 billion in September. And that was then. As you know things got much worse in October. By September some of those severely hit by this financial crisis were Oracle founder Lawrence Ellison, who saw his fortune drop by $2bn (and ORCL went down another 15% in October), Maurice Greenberg, who was ranked by Forbes as the 135th wealthiest American and is not on the Forbes 400 anymore, since as a former chairman of AIG much of his $2.8 billion net worth was in company stock. Sergey Brin and Larry Page are both down $1.5 billion (GOOG went down 11% during October). Bill Gates was down $1.5 billion too at the beginning of October and MSFT is down another 14% since the end of September. Casino magnate Sheldon Adelson saw his fortune dropping from $15 billion to $11 billion in September and lost even more in October, with his LVS shares down 75%. The list goes on, you find other examples on Forbes here and here.
. And this is a global phenomenom. Former communist countries like Russia and China who had become the biggest factories of billionaires around the world now see this billionaires rapidly disappearing. I leave you with this article from Bloomberg explaining how Russian billioanaires lost a staggering quarter of a trillion dollars recenly.
Now the thing is, will this shrinking gap between rich an poor do any good? No, because it won’t make the poor any better off. It will just make the wealthy less wealthy.
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