0 - Introduction
1 - How financial wealth is built
2 - The (ir) relevance of financial wealth per adult
3 - Where does financial wealth accumulate?
4 - Inequalities in the distribution of financial wealth
---- || ----
0 - Introduction
Recently we exposed elements on the wealth per adult for European countries and, for some other particularly relevant in the global context, for the years 2000, 2008 and, 2019, proceeding to the analysis of changes relevant. In summary, we refer here to the average value, a level overall, was $ 70849 / adult in 2019; and $ 48,507 or, $ 3141 5, respectively, in 2008 and 2000. It is not difficult to conclude that the financial crisis and austerities who have reached the great majority of human beings, walking aside to some that add their wealth. While governments are struggling to increase the diaphanous GDP[1], requiring sacrifices to the populations in general, the wealth accumulates, mainly in the form of registers contained in parks of mainframes.
The expression of total wealth, for each country, shows that Europe had a double indicator of that generated for the world as a whole, in 2000; that difference rises to 2.8 times in 2008 but declining to 2.2 times in 2019. They are very few countries that improve the indicator in 2008/2019 more than in 2000/2008 and inside this group, are the poorest, from Eastern Europe, beyond China, India and, Brazil. The global financial crisis particularly affected Europe, whose financial wealth grew 1.25% annually in 2008/2019 compared to 14.7% in the previous period. It is known... that Europe is becoming - economically and politically - on the Asian peninsula that it always has been, geographically.
1 - How financial wealth is built
More than half the world's wealth (62% in 2019) consists of financial assets as a result of increased mobility of these assets, their generation and, easy multiplication, repeatedly been almost instantaneous and off of any base material known or, "palpable". It is more tempting to bet on roulette in the financial markets and add value to so-called assets than to set up an industrial, trade or, services company and wait - a time that may be too long - to obtain a compensating reproduction of the invested capital. On the other hand, this company that produces goods or services also seeks to use its securities - shares, bonds, own or from other companies, to increase its profits and the appreciation attributed to it by the… market. This mobility, in substance, leads to the financial system taking over Humanity.
Financial speculation seeks to value its assets - or rather, electronic registers - so instantaneous as possible; and it is always ready to value its assets, without limits, in a logic that can be defined mathematically in the form of Ponzi pyramids; or, like the desire of a Tantalum, permanently trying to indulge itself without ever achieving it.
There are constantly rises and falls in the value of these electronic records and, anything, or anyone, controls but where many are involved by applying their expectations real or disseminating false expectations for the unwary; and, all of this requires quick decisions, far beyond the ability of human beings to discern and, delivered to supercomputers instructed by computer applications that search the financial market, local or global, in search of situations conducive of buying and selling assets. Hence the transition from euphoria to depression or, from this to the first, can be phenomena as surprising as they are uncontrollable. For example, recently, the Dow Jones index fell 4.4% on 2/27, 7.8% on 9/3, reaching the biggest break ever on 3/12 (10%), without any prediction of the break and, still less, of its size.
Deposits and debts are now mere electronic records, and the well-known banknotes and coins represent only 5% of the total; and have, in Europe, the death announced for the next years making all purchases and transactions carried out only through electronic registers and circuits. It will be the time of the absolute domination of human beings by the financial system; today, in Portugal - and it will not be a unique case, of course - the NIF[2] is assigned shortly after birth.
The old anchors for the constitution of currency and reserve of value - gold and silver - are valued at about $ 10900 billion[3] and, it is not expected that they will have great growth. And the global debt ($ 253000 billion) can never be exchanged, without a brutal devaluation, for precious metals, whose stock on the planet is limited. If we want to go further and enter into account with derivative products (valued at $ 1 trillion), is unimaginable the set of conflict, disorder and economic and social that power will result from his confrontation with reality, in which it is clear the impossibility to count on a Humanity capable of transforming such derivative products into goods and services.
A typical case of currency/debt creation was created by Draghi, a man at Goldman Sachs, as the top head of the ECB. The model is simple.
Some countries in Southern Europe, with high deficits and public debt, resort to debt issues in the “market”; buyers papers do not sit and happy with the low or negative interest rates and forward these credits to ECB as a guarantee of liquidity provided by the same. On the one hand, there is an increase in a country's public debt; and on the other, the securities are delivered by their owners to the ECB that accepts them as collateral for the money that ECB provides to be placed in speculative operations in the context of the global financial system, feeding the said scheme of Ponzi pyramid... ad infinitum. In this context, the ECB, the Eurogroup, the European Commission, will knowhow to impose their rules on countries with financial problems, even if it results in the impoverishment of their population; on the other hand, they will be happy for their contribution to the dynamization of the global financial system, without any constraints or controle.
In this context and as the financial system increases its role as a holder of power, more insignificant and volatile are the monetary reserves of banks (mainly central) and greater are the weaknesses of the financial system, which will tend to reproduce increasingly deep and frequent financial crises.
ECB is happy because it assumes rights over the debtor state, for an amount that it has, in the meantime, handed over to the speculator. If the speculator, however, disappears in the lust of the speculative market, the relationship between the ECB and the debt-issuing State remains unchanged, with its population being squeezed by its government, stimulated by the said ECB, with the latter demanding issuing State and the respective political class that complies with rigor and obedience, the fiscal exception, privatizations and all policies to pressure the population.
Intending to postpone ad infinitum the time for adjusting debt chains, the financial system controls states and political classes to press the population (and real or fictitious work) and generates cascades of consumption and investments where are anchored new and expanded circuits of monetary income and its anticipations through new debts. The said financial market is, for the crowd of humans, volatile as ether, expansive as a gas, poisonous as arsenic.
In case of failure of a big bank, there are states to balance the books of failed banks, as, among others, the Allied Irish Bank and other Irish banks, the Franco-Belgian Dexia or the polynomial known as BES / “Good” Bank / “Bad” bank / New Bank / Resolution Fund, where we highlight the moralistic designations of good and bad[4].
Ultimately, financial capital, after consuming everything around it, drowns in itself [5]; ... which would not be bad if it did not contaminate Humanity with its insatiable and demented gluttony. 2008, millions evicted from their homes, thrown out of work, burdened by public debt growth, gave a slight sample of the near bursting financial bubble.
2 - The (ir)relevance of financial wealth per adult
As shown in the following table, the share of financial wealth in total is, worldwide, and in 2019, 62.1%; slightly below that observed in 2000 but higher than that recorded in 2008. As we know, it was a time of economic and financial difficulties, essentially with the fall of Wall Street, the bankruptcy of Lehman Brothers and, in Europe, with several banks to benefit from public support to cover toxic assets. And that situation involved and reached the States which, in turn, burdened the people with more debt charges, taxes, unemployment and, the effects of muscular interventions to become precarious people's lives... Covid-19 is filling a second chapter of the same impoverishing narrative, led by today's.
|
|
2000 |
2008 |
2019 |
2000/08 |
2008/19 |
|
1 - Total wealth / adult ($) |
31415 |
48507 |
70849 |
+ 54.4% |
+ 46.1% |
|
2 - Adult / financial wealth ($) |
20060 |
28232 |
44022 |
+ 40.7% |
+ 55.9% |
|
2/1 (% ) |
63.9 |
58.2 |
62.1 |
- |
- |
The following chart identifies the weight of financial wealth for the set of countries already chosen in the previously published text, for the three selected years.
There, it is observed that the cases of a steady rise in the weight of financial wealth are, in general, those where their share is shown to be the lowest, all from the East and the Europeans, with emphasis on Albania and Belarus, each with 8.5% of the total, in 2000. The progressive integration of those countries in the EU, in its orbit and, in parallel, in the global financial system, fosters a greater weight of the financial wealth per adult in those countries. Thus, in 2019, the lowest indicators of participation in financial wealth are found in Albania (14.7%) and Lithuania (12.8%).
There are some countries where the 2008 crisis did not cause breaks in the weight of financial wealth, which continued growing in 2019. Among them, prevail Eastern countries but also, rich countries such as Denmark, Luxembourg and, Norway; apart from India and China, in 2019, with the last showing an higher rate to the European average.
Conversely and still in relation to 2008, some countries in 2019 reduced their absolute number of financial wealth - Cyprus (- 24%), Greece (- 22%), Italy (- 7%), Portugal (- 2%). Apart from Turkey which maintains the same level of financial wealth in 2008 and 2019 and, Japan (+ 3%), cases of slight increase show up in Ireland (4%) and Spain (7%), other victims of austerities and profound changes in indigenous financial systems.
In 2000 and 2008 the greatest indicators of financial wealth were found in the USA (80.1 and 85.2% of the respective total) and Switzerland (76.8% and 72.2%). In 2019, the United States has the highest worldwide rate of financial wealth (84.4% of the total), followed by Denmark (82.6%) and the Netherlands (79.9%).
Share of financial wealth in total wealth for each country (%)
Primary source: Credit Suisse - Global wealth reports
The changes revealed by the graph above, synthetically, show:
· Although the falls in the weight of financial wealth were approximated in 2000/2008 and 2008/2019, their dimension is much more accentuated in the first period. And this is reflected in the global indices; in 2000/2008 there was a fall in Europe of 10.1% and in the World of 5.7% and, in the last period, both are positive and approximate, 4.1% and 3.9%. The countries with breaks in both periods are Germany, Austria, Slovenia, Italy, Lithuania, Portugal and Switzerland;
· The highest growth levels of financial wealth in the period 2008/2019, are revealed in a few countries - Belarus, Bulgaria, Denmark, the Netherlands and, the USA; much less numerous than in the previous period. The financialization of economies and their dominance over States, companies and, individuals is accentuated, taking into account the decline in economic activity that followed the financial crisis of 2008; as a consequence of this decline, with the increase of debts, mainly public.
· The reinforcement of financialization is visible in the 2000/08 period and, in Eastern European countries, the object of changes aimed at following the steps of countries with older market economies. Among others, Hungary increases its financial wealth 38 times in that period, while Russia and Ukraine increase it, respectively, by 16 and 14 times.
3 - Where does financial wealth accumulate?
We aggregated all countries into four major groups - three according to the volume of their financial wealth per adult, within the scope of the initial selection - and another, with the rest of the world.
Table I - Financial wealth by groups of countries, by capitation rate per adult
|
Capitation per adult |
2000 |
2008 |
2019 |
|||
|
$ 1000 million |
% |
$ 1000 million |
% |
$ 1000 million |
% |
|
|
< $ 10,000 |
2374 |
3.2 |
10639 |
8.4 |
3408 |
1.5 |
|
India |
208 |
0.3 |
664 |
0.5 |
2751 |
1.2 |
|
China |
1369 |
1.8 |
7572 |
6.0 |
|
|
|
Others |
798 |
1.1 |
2403 |
1.9 |
657 |
0.3 |
|
$ 10000-100000 |
13043 |
17.5 |
10795 |
8.5 |
44602 |
19.9 |
|
China |
|
|
|
|
36191 |
16.2 |
|
> $ 100000 |
52063 |
69.7 |
88111 |
69.6 |
145267 |
64.8 |
|
Others |
7171 |
9.6 |
17021 |
13.4 |
30786 |
13.7 |
|
total |
74652 |
100.0 |
126566 |
100.0 |
224062 |
100.0 |
The lowest levels of financial wealth per adult represent very little in total, in 2000, even though this group includes the two most populous countries on the planet. In 2008, its representativeness increases visibly due to the evolution registered by China, which, in 2019, now holds, by far, the largest share in the group of countries with an average financial wealth per adult in the $ 10,000 / 100,000 range. Still in 2019, the (low) volume of financial wealth in countries with lower capitation per adult, after the change of scale in China, will be dominated by the share of India, among several countries in Eastern Europe.
In the group of countries with $ 10000/100000 of financial wealth per adult, the representation decreases in 2008, and in absolute terms.
There are two reasons for this change. One is because in 2008 several rich countries in Europe came to belong to the group of the richest - such as Belgium, France, Holland, Italy and, the Scandinavian countries, among others; and the other reason is that the countries that came from the lower echelon (<$ 10,000) - Eastern European and Balkan countries - show indicators of less financial wealth than those that moved to the upper echelon. The only rich countries that have remained in the group of those who have $ 10,000 / 100,000 of financial wealth per adult are Germany and Austria.
In 2019, the great rise in total financial wealth compared to 2008 is due, specifically, to the inclusion of China, which, as noted, increasingly assumes the role of financial power, which has been useful, not only for broadening the role of the yuan as an international currency, as well as to finance investments in the various countries crossed by the Silk Road infrastructure. Thus, China's financial wealth quintupled in 2008/19 while that of the USA increased by 89%; and, if the referred American wealth corresponded, in 2008, to nearly seven times the Chinese, in 2019 it was only 2.5 times.
As for the group of countries with the highest values of financial wealth per adult (> $ 100000), the evolution does not differ much (+ 69% and + 65%, respectively in 2000/2008 and 2008/2019), although the number of included countries have evolved far beyond the four registered in 2000 (GB, Japan, USA and, Switzerland); 14 in 2008 and 16 in 2019, obviously all included among the wealthiest.
For the curious, the financial wealth recorded for Portugal has evolved throughout this period as follows - $ 206.8 billion in 2000, $ 481 billion in 2008 and $ 465 billion in 2019 where it is clear that the loss of wealth accompanied the great debt rise and, despite the sale of many public stakes in companies, imposed by the troika.
Finally, the set of countries not individualized in this work (Other[6]) increase their share of global financial wealth in 2008, with little evolution in their representativeness in the most recent data.
4 - Inequalities in the distribution of financial wealth
As is well known, when capitalism globalizes its model of accumulation and distribution, it generates a dynamic where immense inequalities are formed, especially in economic terms; and, resulting in political, educational, health and, environmental inequities, among others.
The distribution of the adult world population by the various levels of financial wealth is clearly shown in the following table:
Table II - Distribution of the adult population by groups of countries and by capitation rate per adult
|
Financial wealth ($) |
2000 |
2008 |
2019 |
|||
|
millions |
% |
millions |
% |
millions |
% |
|
|
<10000 |
1825.5 |
49.1 |
2116.1 |
47.2 |
993.8 |
22.2 |
|
India |
578.6 |
15.5 |
731.3 |
16.3 |
865.8 |
19.3 |
|
China |
862.9 |
23.2 |
1015.2 |
22.6 |
|
|
|
Others |
384.0 |
10.3 |
369.6 |
8.2 |
128.0 |
2.9 |
|
10000-100000 |
253.4 |
6.8 |
191.8 |
4.3 |
1436.9 |
32.0 |
|
China |
|
|
|
|
1090.2 |
24.3 |
|
> 100000 |
351.5 |
9.4 |
520.3 |
11.6 |
669.0 |
14.9 |
|
Others |
1291.0 |
34.7 |
1655.0 |
36.9 |
1385.0 |
30.9 |
|
World |
3721.4 |
100.0 |
4483.6 |
100.0 |
5094.6 |
100.0 |
We observe some of the huge discrepancies resulting from the comparison between Tables I and II; between plots in the global financial wealth and adults world population.
In the case of chosen countries with levels of financial wealth, per adult, below $ 10,000, it is observed that in the year 2000, 49.1% of the people held only 3.2% of the global financial wealth. And with the departure of China from this group, in 2019, 22.2% of the world's adult population owned 1.5% of the financial wealth, almost all of which belonged to India.
In the case of chosen countries with levels of financial wealth, per adult, below $ 10,000, it is observed that in the year 2000, 49.1% of the people held only 3.2% of the global financial wealth. And with the departure of China from this group, in 2019, 22.2% of the world's adult population owned 1.5% of the financial wealth, almost all of which belonged to India.
In the $ 10,000 / 100,000 bracket of financial wealth, in 2000, 6.8% of adults owned 17.5% of that wealth. In 2008, the gap remains but is less deep - 4.3% of adults with 8.5% of financial assets, an imbalance that remains in 2019, even with China's integration in this group.
The case of China is particularly noteworthy since, keeping its share in the world total of adults relatively constant (around 23%), its financial wealth evolves from 1.8% in 2000 to 16.2% in 2019, with 6% in 2008.
At the highest level of financial wealth holding (> $ 100,000 / adult), where the richest countries predominate - Western Europe, USA and, Japan - their financial wealth is just under 70% of the world total in 2000 and 2008, to decline to 64.8% in 2019. However, its adult population exceeds 9.4% of the total in 2000 and reaches 14.9% in 2019, most likely, as a result of aging, the arrival of many immigrants, having as counterpoint low birth rates.
As for the group of “Others”, the adult population exceeds 30% of the total and does not exceed 13.7% of the total financial wealth in 2019.
Table III summarizes the evolution of wealth per adult for the various segments of its dimension:
|
Table III - Wealth per adult ($) |
|||
|
Financial wealth / adult ($) |
2000 |
2008 |
2019 |
|
$ |
|||
|
<10000 |
1300.6 |
5027.8 |
3428.9 |
|
India |
359.0 |
908.0 |
3176.9 |
|
China |
1586.0 |
7459.1 |
|
|
Others |
2078.0 |
6501.1 |
5133.1 |
|
10000-100000 |
3149.0 |
56282.6 |
31040.1 |
|
China |
|
|
33196.9 |
|
> 100000 |
148116.7 |
169345.9 |
217129.2 |
|
Others |
5554.6 |
10284.5 |
22227.9 |
|
World |
20060.1 |
28228.6 |
43980.2 |
For the group of countries with the lowest financial wealth, their average levels in 2019 represent only 7.8% of the world indicator, with a drop compared to 2008 after China's promotion to a higher level. This passage is also reflected in the drop observed in the following wealth interval, which in 2008 had a high volume.
As for the highest level of wealth per adult, there is an increase in both periods, particularly in the last. This means that the wealthy did not have a major shock with the vicissitudes of the situation, even in the financial area, which constitutes their world[7].
In the residual group of “Others” there is an approximate doubling of the indicator in each of the two time intervals considered.
As described above, the evolution of financial wealth, even calculated per adult, is only an abstract indicator, this wealth has a high degree of volatility of the kind of electronic registration and unpredictability of operating of the so-called financial markets.
(to be continued)
This and other texts in:
http://grazia-tanta.blogspot.com/
http://www.slideshare.net/durgarrai/documents
[1] The fixation of States with GDP growth corresponds to that of capitalists in constantly increasing profit and wealth, the accumulation of capital, even using wars, diseases, deficiencies and enormous sacrifices for humanity, to the point of generating pandemics, destruction and, endanger the balances that allow life on Earth. In times gone by, myths were generated about the tare of infinite accumulation of wealth, something similar to what became the logic of infinite GDP growth, currently facilitated by the greater presence with virtual money that allows an infinite accumulation of capital. Thus, one can think of the fable of King Midas that, in everything he touched turned into gold, be it food, a river or his own daughter; or, the version of Callimachus or Ovid in which the protagonist is the king of Thessaly, Erisicton, who for having cut down a sacred tree, was punished by the goddess Demeter with an insatiable hunger that made him reach the point of eating his own body.
[2] Unique Taxpayer Reference (UTR) in Great-Britain or Taxpayer Identification Number (TIN) in USA
[3] In Portugal, 1 billion= 10^12, 1 trillion = 10^18
[4] http://grazia-tanta.blogspot.pt/2014/08/o-bes-bom-o-bes-mau-e-ma-gestao-dos.html
http://grazia-tanta.blogspot.pt/2014/07/hecatombe-bes.html
http://www.slideshare.net/durgarrai/nacionalizao-da-banca-piada-ou-mistificao
[5] Only the value of derivatives (conservative notion) corresponds to $ 558,500 billion (BIS calculation) and the overall debt at $ 253,000 billion according to the IIF Debt Monitor. If the world GDP is in the order of $ 86000 billion, it would be necessary for Humanity to dedicate itself entirely to amortize debt for more than three years to settle that amount of debt, admitting that… there would be no generation of new debts, nor satisfaction of needs currents on the part of humanity. As, in fact, the debt is not payable, in general and for many countries, institutions and families, a conservative solution would be a return to the regular Jubilee already contained in the code of… Hamurabi. However, the so-called right or left of party spectrums are zealous defenders of the legitimacy and rigorous payment of public debts, begging only a small cut in interest rates… capitalism must go on …
[6] In Others are all African countries, those on the American continent excluding USA and Brazil and those in Asia and Oceania except China, India and Japan
[7] Looking at these figures and comparing them to the $ 414 billion that make up the sum of the wealth of the five richest people on the planet (Bezos, Gates, Arnaud, Zuckerberg and Ellison) is disgusting.
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