The 0.01% Have Never Had It Better

Tyler Durden's picture




 

Over the years, as the WSJ notes, the only way inequality has really mattered to professional investors is 'if the rich are getting richer, companies that cater to them have better prospects'. Lately, though, some big investors have worried increasing income and wealth gaps threaten the economy's ability to expand (discussed here and here most recently.) One reason U.S. corporate profit margins are at records is the share of revenue going to wages is so low. An economy where income and wealth disparities are smaller might be healthier; but it would also leave less money flowing to the bottom line, something that is increasingly grabbing fund managers' attention.

 

Via WSJ,

...

 

Over the years, the only way inequality has really mattered to investors has been as a factor when considering stocks. If the rich are getting richer, companies that cater to them have better prospects. Goldman Sachs Group, for example, recently conducted a survey that showed optimism among high-income consumers relative to low-income ones at a high and pointed investors toward companies like department-store operator Nordstrom and luxury-bag maker Tumi Holdings.

 

 

Lately, though, some big investors have worried increasing income and wealth gaps threaten the economy's ability to expand. They also fret that public anger over it

 

...

 

Former Morgan Stanley equity strategist Gerard Minack notes the U.S. Gini index, a gauge of income disparities that is also at a record, tracks with measures of political polarization. So he worries inequality could give rise to more political dysfunction that risks damaging the economy.

 

Another concern is that rising inequality creates financial instability. Raghuram Rajan, the economist now heading India's central bank, has posited that the credit bubble in the early part of the last decade was a consequence of inequality.

 

...

 

But if inequality has risen to a point in which investors need to be worried, any reversal might also hurt.

 

One reason U.S. corporate profit margins are at records is the share of revenue going to wages is so low. Another is companies are paying a smaller share of profits on taxes. An economy where income and wealth disparities are smaller might be healthier. It would also leave less money flowing to the bottom line, something that will grab fund managers' attention.

 

So the dilemma is - any "attempt" to 'narrow' the inequality gap will be necessarily restructive of the factors that are juicing stock prices and exaggerating the inequality gap BUT if stock prices take a hit, with ZIRP, firms will simply relever more, layoff (cut costs) more, and re-iterate dividend/buyback programs... A vicious circle with only one outcome - aptly described by Kynikos Associates founder James Chanos, who worried people have less incentive to participate in the economy if they have concluded "the game isn't fair."

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Mon, 11/11/2013 - 11:57 | 4142720 LawsofPhysics
LawsofPhysics's picture

and the guillotines have never been sharper...

Go ahead, don't pass a farm bill and shut down that SNAP program...

Add capital gains to that data and it's even better for the 1%...

However, "money" and all that "wealth" will become irrelevant overnight when people start starving.

Tick tock motherfuckers...

Mon, 11/11/2013 - 12:00 | 4142733 edifice
edifice's picture

Oh, believe me, they will do anything it takes to keep SNAP and the NFL/wings/beer complex fully funded and flowing to the unwashed masses.  Even if this requires nationalizing the NFL (it won't; NFL has zero financial problems).

Mon, 11/11/2013 - 12:20 | 4142782 Beam Me Up Scotty
Beam Me Up Scotty's picture

Funny thing is, most of the people that voted for Obama, did so under the belief that things would "change".  Instead, he accelerated the money flow to the top.  Meanwhile, the 50% that voted for him are happy as pigs in shit because they get a free Obamaphone.  Baah.  Baaaah.   BAAAAAAAAAAAH!!

The guillotines should be used on the parasites that helped enable this shit too.  Get rid of the .01% and you will still have the 50% of parasites around.

Mon, 11/11/2013 - 13:21 | 4142944 SoilMyselfRotten
SoilMyselfRotten's picture

Get rid of the .01% and you will still have the 50% of parasites around.

 

 

If the .01% made reasonably less of their enormous profits, maybe the lower 50% would be less parasitic.

Mon, 11/11/2013 - 13:43 | 4143002 silverserfer
silverserfer's picture

Scotty, it would not have mattered who was "voted" in. Bankers rule and your a sucker too for STILL being caught up the the left right BS. 

Mon, 11/11/2013 - 13:51 | 4143021 RaceToTheBottom
RaceToTheBottom's picture

At some point a person graduates from being a sucker to being downright FUCKING STUPID

Mon, 11/11/2013 - 14:01 | 4143046 SilverDOG
SilverDOG's picture

Scotty proves as such, with a typical normalcy biased blame degree.

 

Mon, 11/11/2013 - 14:18 | 4143084 Citxmech
Citxmech's picture

Ha ha - looks like an exponential curve!  Could we be experiencing a bubble in 0.01%ers?

Peak concentration of wealth.  I love it. 

Mon, 11/11/2013 - 16:14 | 4143441 Beam Me Up Scotty
Beam Me Up Scotty's picture

Ya right, Ok, Silverdog, because we all know if the .01% shared their wealth, the bottom 50% of takers would suddenly be at their job with a smiley face on.  Sure.  They'd still be sucking on whomever's tit they could get their mouth on.  Talk about normalcy bias.....

Mon, 11/11/2013 - 16:12 | 4143435 Beam Me Up Scotty
Beam Me Up Scotty's picture

Where in my post did I mention left/right?  Fact is at least half of this country are in the parasite class.  And they enable whoever happens to be in power, be it left right, up or down.  Get it?

Mon, 11/11/2013 - 12:57 | 4142876 Id fight Gandhi
Id fight Gandhi's picture

Speaking of the NFL.... Did you know it's a non profit organization?

The team fees paid to it are even tax deductible.

Mon, 11/11/2013 - 13:18 | 4142937 edifice
edifice's picture

"Non-profit" (with quotation marks the size of Texas).

Mon, 11/11/2013 - 14:28 | 4143116 MachoMan
MachoMan's picture

The amount of non-profits that are actually non-profit are few and far between...  they're nothing more than a gigantic loophole for people sophisticated enough to use them.

Mon, 11/11/2013 - 13:29 | 4142969 disabledvet
disabledvet's picture

Plus you get massive tax abatement a for building Stadiums, all sorts activities at the ten thousand casinos now dotting our land scape and some quality time at the bar starting at 900AM. Are people even going to the games anymore? Most of these stadiums sit empty now. We'll see if popping the bubble this summer has the usual impact of "shoot"(higher) and "scoot"(sell into strength) or not. A lot of TRUE competitive pressures are starting to build in the economy...and if you think equities care one but about the massive debt loads created by this "jobless prosperity" I've got a bridge that needs unloading to someone with just a dollar in his pocket.

Mon, 11/11/2013 - 12:04 | 4142738 diesheepledie
diesheepledie's picture

"However, "money" and all that "wealth" will become irrelevant overnight when people start starving.".

 

You don't think the top 0.01% have been preparing? You can buy a lot of nice weaponry, training, food, fortified shelter, and trained body guards with $100M. The people that do well in today's ponzi are smarter than the sheeple and will do just as well (if not better) when the system collapses into chaos.

Mon, 11/11/2013 - 12:23 | 4142801 Platinum
Platinum's picture

All that money will allow them to survive, but these fuckers want more than wealth. They want power, and when things start collapsing, they'll lose a lot of the power that was tied to people buying into the system.

The regular people that are smart enough to prepare for the collapse, will be the ones providing the resistance as the system resets.

Mon, 11/11/2013 - 12:28 | 4142816 TrumpXVI
TrumpXVI's picture

Don't kid yourself.

They'll have the power, too.

Because in addition to the gold and the guns, they'll have the productive farmland, too.

You know how the Middle Ages worked?  See the short list in the above sentence.

Mon, 11/11/2013 - 13:01 | 4142884 Platinum
Platinum's picture

They still require people to give their consent. A lot do, and still will, no matter what.

 

But a determined person can do a lot. The more people that wake up before the reset, the better. Are the odds stacked? Yes.

 

I just refuse to give in to despair. My life was far worse growing up and I survived that.

 

Interesting times. Really strong strains.

Mon, 11/11/2013 - 13:57 | 4143034 James_Cole
James_Cole's picture

The very rich definitely arent smarter, just bigger assholes.

Mon, 11/11/2013 - 13:44 | 4143007 Wahooo
Wahooo's picture

Yep, these mega-rich fuckers won't even be touched. They'll find somewhere in our country to another country surrounded by that country's paid-off military and drug lords and no one will get near them. Look, these guys' wives are the most devious, power-driven cunts in the world, and if their boys begin to falter, they will whip them into all sorts of criminal activity to maintain their positions. It's all easily justifiable, too. They tried to help us with government assistance and we simply turned our backs. "Fuckin' low-brows" they'll say. And 2 billion rounds will get spent and then some. Don't count on our cops and military to be on our sides, those people are highly trained to take orders even in the face of death. Reason won't even enter the picture when they're dropped into a domestic war zone.

Mon, 11/11/2013 - 14:02 | 4143037 Acet
Acet's picture

And yet the wealthy had it much better during the times of the Roman Empire and the Renaissance than in the Middle Ages, even though wealth was much more evenly spread in the epochs before and after the Middle Ages than during it.

Not only that but those who were wealthy before the Middle Ages mostly lost everything with the coming of the Middle Ages.

 

Translating it in modern terms: the collapse of the system will hurt the wealthy as much or more than the poor, and even though a new elite will arrise with far more power over everybody else, they will still have it nowhere near as good as they would in a more equal society were people are fairly treated and allocated to doing what they do best independently of their parentage.

When a society is producing closer to it's ideal output, there is much more wealth to go around, so even a much smaller slice of the pie of a well balanced, productive society is far more that the entire pie in a time like the Dark Ages.

Mon, 11/11/2013 - 14:31 | 4143121 TrumpXVI
TrumpXVI's picture

An interesting aside to this theme is the probabilty that the Third Reich would have been better off (in terms of total volume of goods) engaged in a normal free trade arrangement with the Ukraine rather than by enslaving and murdering everyone in the Reichskommisariat Ukraine (which was hugely damaging to output).  Germany was able to get everything it needed from Stalinist Soviet Union; coal, oil, grain, etc. in normal trade agreements.  But Hitler wanted all of Europe to the Ural mountains for settlement, not just for trade.

At the end of the day, I agree completely that the wealthy will be hurt almost as badly as the poor.  For one thing, they have far further to fall, and for another, they don't have any more of a clue as to how to negotiate the radically changed landscape we're likely to inhabit as anyone else.  No one is prepared for what is coming.  But if collapse can be managed slowly enough, the wealthy will be the ones best equipped to make some sort of transition and maintain their positions of privilege.  I think this is the plan; the collaboration between government and the elites; manage contraction to the benefit of the few.

Mon, 11/11/2013 - 15:11 | 4143238 aerojet
aerojet's picture

I agree with that assessment.  It fits what is taking place better than the typical inter-generational conspiracy theories being thrown around. 

The Nazis were ideologues who hated communists and humans of lesser breeding.  It was insane, and thus insane policies were the outcome.  Lebensraum was that desire for a German empire re-settling surrounding lands with like-minded people in order to create a buffer zone that could protect the 1000 year reich.

Mon, 11/11/2013 - 14:37 | 4143141 MachoMan
MachoMan's picture

There are no guarantees on productivity, regardless of how evenly distributed the benefits therefrom may be...  Further, productivity is not caused by a perfectly distributed profit system.  What we've been evolving toward is a system that keeps pushing the boundaries to which the common man will accept government intrusion into his life and confiscation of the spoils of his labor.  We're pinpointing exactly the minimum amount of standards and things that will keep a revolt from happening.  The formula isn't far from being perfected.

The only things that stop this process are unforseen and external.  Thankfully, there is a reset every so often and we begin the process again.  However, each successive cycle, we're inching towards something.

Mon, 11/11/2013 - 17:55 | 4143717 Ying-Yang
Ying-Yang's picture

Well said Macho. They are testing, tweaking and recalibrating daily.

Thu, 11/14/2013 - 04:05 | 4153253 Acet
Acet's picture

Agreed.

The thing is, given my Physics and Electronics training and having observed how time-delayed reaction is typical of human beings (in physics terms it would be called hysteresis), I very much doubt that there is a static stable state for human societies: at best what we can have is a stable ciclical system.

Sadly most of the Economic and Political theories out there focus on static societal and economic states to solve humanity's problems, when by our very own nature we're always changing in response to our environment and past inputs, hence the great thinkers keep coming up with solutions that don't work.

 

Mon, 11/11/2013 - 18:16 | 4143777 Liberty2012
Liberty2012's picture

Well said Acet, although I disagree that the reset will result in a Middle Ages. It's possible, but not probable.

We are actuallly in the modern "dark ages" now. Central Planning has squelched initiative. The reset will release that energy and a reordering of relative values will commence. The transition period will be unpleasant, but it will last months / years, not decades / centuries.

Many more people are awake than we think. More and more all the time.

Mon, 11/11/2013 - 14:23 | 4143102 presk_eel_pundit
presk_eel_pundit's picture

Like the song said, "We're going to Serf City"!

Mon, 11/11/2013 - 17:56 | 4143719 yrbmegr
yrbmegr's picture

Interesting that you mention the Middle Ages, referring of course to feudalism.  Under feudalism, one guy owned the land and let people live on his land, and extract wealth from it, under certain circumstances.  The usual arrangements involved something roughly equivalent to local taxation and an obligation to defend the lord's property.  Under feudalism, land was the key to wealth and power.  Fast forward: today, instead of land, it's capital, but the system is roughly the same, as are its social effects.  

Mon, 11/11/2013 - 18:24 | 4143803 Liberty2012
Liberty2012's picture

I agree yrbmegr, see my post above. However, a ponzi / fraud / central planning / tax scheme is not capital. It is theft of labor.

Capital is tools we use to make things. Debt is not capital.

:)

Mon, 11/11/2013 - 12:26 | 4142809 Yousif
Yousif's picture

http://youtu.be/fwf6KQnekHo

In all honesty, I do not believe an armed revolution is necessary.  It is, however, probably what they are looking to provoke.

History has shown that the 99% are disposable and, even better, the 99% will gladly dispose of itself without the 1% needing to get their hands dirty.  What an amazing deal?

I'm not advocating lieing down in the feutal position and allowing life to pass by, howeve, I am saying that the system is so manipulated right now, that there are very few outcomes that will be genuinely in our favour (whichever tax farm you were delivered in).

What is required is not "more of the same", what we need is a new paradigm.  The word "tribe" and "tribal affiliations" need to be reviewed.

I'm more than happy to sit down and prepare for history to repeat itself.  At the pace things are going, that is exactly what is going to happen.

Mon, 11/11/2013 - 15:07 | 4143224 aerojet
aerojet's picture

Yes, except with nuclear weapons.  The pressure will only build until a war breaks out and when someone starts to lose that war, then the nukes will be used.

Mon, 11/11/2013 - 12:27 | 4142813 LawsofPhysics
LawsofPhysics's picture

Unfortunately, that won't work forever unless they have their own oil fields.  Sorry, they will eventually have to feed on each other.  Basically, the future of the world is a return to tribal cultures, just like Afghanistan (who'd a thunk it?).  I don't know if I would consider that "winning".

Mon, 11/11/2013 - 13:35 | 4142986 Kirk2NCC1701
Kirk2NCC1701's picture

I agree.  Furthermore... What is going and and what you describe reminds one of the era of the Robber Knights and their fortresses they created along the trading routes and nodes.

Mark my words: We have a new era of Feudalism breathing down our necks...

With the exception of a update in the actors' titles and names, and a change in the stage setting, the PLOT, the GAME, the OBJECTIVE remains the same:  TRANS-GENERATIONAL RIGHT TO RULE by the Few over the Many.  The same shit we had for over a thousand years, aka Feudalism by the Aristocracy. 

Mon, 11/11/2013 - 16:03 | 4143406 TeresaE
TeresaE's picture

Of course they have been preparing.

If I had the funds I'd have a bug out shelter well-stocked too.

BUT, feel assured, most of the 0.1% have NO capability of taking care of their own needs. Hell, most of the bottom 20% can't either.

So, whom will be working for them? Cooking for them? Cleaning? Manning the walls and protecting the gardens? Do you think the neighbors won't notice that their workers' kids are fed and that you are working for the man?

If I remember what I learned (long, long, ago) about the French Revolution, it was that the servants of the rich either helped overthrow their masters or were killed along with them by the starving hordes.

Why would this time be any different?

Mon, 11/11/2013 - 12:55 | 4142872 TahoeBilly2012
TahoeBilly2012's picture

All Hail the "Protocols of the Learned Elders of Zion" (and a few friends)

Mon, 11/11/2013 - 15:11 | 4142995 Kirk2NCC1701
Kirk2NCC1701's picture

[que the song]..."That ain't working. That's the way you do it. Money for nothing, and Shiksas for free."  We are in dire straights indeed.

Whatever label of convenience you apply, if I had to use modern models of System Analysis, I'd conclude that they are using a "Series of nested, leveraged controls", where the few control the many.  For example...

A few like-minded people (clan or tribe members) work in tandem*.  They 'position' themselves to gain dominance, then effective control of a company.  They work together, to promote their kind/members up the corporate ladder.  It's about Positioning and Leverage, repeated over and over.  This type of corporate leverage by its executives is "strategic operational leverage".  Likewise, when some wealthy individuals buy controlling shares in a public company, they have "strategic ownership leverage" of a company.  When this (operational and ownership leverage) happens in a number of companies in an industry (where a few control both its operations and ownership), you have leveraged control of an entire industry.

When you repeat this process in a number of key industries (finance, media, the MIC), you end up attaining leveraged control over a country's structure of power and influence.  With it, you attain control over its Judiciary.  The Judiciary can enforce and interpret laws to its liking/agenda, and it lasts far longer than most politicians-of-convenience (useful fools and tools).

When you've repeated these strategic processes internationally, by starting out with the most powerful countries that allow your Leverage Games to get established and grow, you can eventually subjugate the weaker countries.  You thus gain control of the entire world, or most of it.  This all happens via this "nested hierarchy of leveraged control". 

And since such an Agenda for World Domination takes several generations and must occur on a global scale, it can only be carried out if the ahderents/followers of such a Plan are bound together in an iron-clad fashion by the multiple bonds of genetic/tribal, cultural and religious kinship.  You have to see yourself not only as 'Seperate' entities in a larger organism, but as superior (or even 'divinely chosen') group of people.  It's all part of the Jedi Mind-trick of being told endlessly that "You are special. You are chosen." Eventually, this belief becomes hard-wired and then becomes self-fulfilling.

 

* It is said that 3 above-average people working as "one" can outperform and outmaneuver almost all of the "best" individuals.  The secret is not so much in being "THE Best", but in (a) becoming very good, and (b) "The Very Good working as One". 

Christians have an inbred handicap -- given that their religion is By, Of and For the WEAK.  They are raised to be Sheep, not Wolves.  Any foreign invasive species (in a political or religious sense) can take advantage of the Christians' built-in weaknesses (of passive acceptance of misfortune or abuse).  /Thanks, Jesus**!  And thanks Church of Rome and Church of England! / sarc.

 

** Jesus of Nazareth (or his indirect followers who actually wrote the Scripture decades later), screwed up BIG time.  Let's not have any of this "the meek shall inherit the earth" or "turn the other cheek" bullshit!  Instead, they should have built it on... Reciprocity.  EQUITABLE RECIPROCITY.  Get it straight, JC, it's "Quid pro Quo".  Sure the Golden Rule is great to live by, but the minute 'they' do not, all bets are off and Equitable Reciprocity (aye for an aye, or an eye for an eye) applies.

In today's context... Ok, so you want to build a religious building (of foreign faith) in our Christian country.  No problem... We get to build a nice Christian Church in yours.  Oh, you want to build 100?  No Problem... We build a 100 in yours. 

Quid Pro Quo, baby, this for that, value for value exchange in kind.  No "freebies out of the goodness of our sheep/Christian hearts.

Oh, you want to have people of your faith be in positions of corporate and political leadership in our company, legislature or judiciary?  No problem... We'll just have our Christian executives and politicians appointed to positions of power and influence in your companies, judiciary and legislature. 

If you're about to panic because of The Constitution, you need to think about it deep and hard... This still does not contradict the "separation of Church & State".  For one, none of these foreign faiths are "Churches".  They go by other labels: Mosque, Synagogue, Temple, etc...

Mon, 11/11/2013 - 15:12 | 4143240 aerojet
aerojet's picture

Well, plus it was all made up.

Mon, 11/11/2013 - 18:42 | 4143867 Liberty2012
Liberty2012's picture

Interesting way of describing the situation. I will agree that the Christian mind set can lead to being taken advantage of in the short term. Long term is a different story. People who value the principles of living and working together freely always come out on top in the end.

We the people create the world we live in with every choice we make.

:)

Mon, 11/11/2013 - 13:21 | 4142949 tempo
tempo's picture

The developed countries are aligned against the 3 billion poor who live on $2/day. Because of automation labor is becoming cheaper and entitlements must increase to maintain social order in the developed countries, therefore all developed countries engage in competitive devaluation which hurt the 3 billion poor. Only the .01% gain from this worldwide program. The population in the developed world will continue to live comparatively well. The 3 billion poor will suffer. The developed countries will arm the 3 billion with small arms so they can kill each other but keep the real nasty stuff to protect their interest.

Mon, 11/11/2013 - 15:04 | 4143213 aerojet
aerojet's picture

The SNAP program is about corporate welfare, not about feeding poor people.  People are just the conduit of the wealth transfer in that case.

Mon, 11/11/2013 - 15:40 | 4143335 Kirk2NCC1701
Kirk2NCC1701's picture

T-Shirt:  RTFG ONC!*  Tick tock. [large font, on 2 rows]

* [small font] Roll The Fucking Guillotines, Or Nothing Changes!

Mon, 11/11/2013 - 11:58 | 4142721 RaceToTheBottom
RaceToTheBottom's picture

"people have less incentive to participate in the economy if they have concluded "the game isn't fair.""

It is not just the economy, it is the financial system, the tax system, the "meritocracy system", etc.

people have less incentive to participating if they have concluded "the game isn't fair."

there, fixed it for you.

Mon, 11/11/2013 - 12:01 | 4142729 LawsofPhysics
LawsofPhysics's picture

Bingo,  I remain long black markets and sharecropping as less than half of the people on earth have any capital invested in any publicly traded "market".  They don't give a shit, a can of fucking beans or a laying hen has far more value than paper script printed out of thin air.

Mon, 11/11/2013 - 12:15 | 4142766 y3maxx
y3maxx's picture

... This Canadian's Remembrance/Veterans Day Thoughts ...Help End all Wars and Pursue Human Rights through one’s own Calling and Art. ...The U.S.A. has become a Country of “Bread and Circuses” As Canadians, Be Careful What and Who You support South of the Border. ...Our four Western Provinces. own a plethora of Natural Resources with only 12.5 million Citizens. We Westerners are but an “Annex/Manifest Destiny” moment away from our Canadian Freedoms. http://en.wikipedia.org/wiki/Bread_and_circuses

Mon, 11/11/2013 - 13:33 | 4142983 disabledvet
disabledvet's picture

I did read that Canadians have the highest savings rate by far in the Western Hemisphere. If Europe is any guide "that is cause for concern."

Mon, 11/11/2013 - 15:14 | 4143245 aerojet
aerojet's picture

And probably also the highest alcoholism rate. 

Mon, 11/11/2013 - 11:58 | 4142725 yrad
yrad's picture

As a 0.02%er I am upset that I am missing out on all the fun!!!

Mon, 11/11/2013 - 12:03 | 4142748 Sofa King Confused
Sofa King Confused's picture

You must be in the bottom 0.02%.

Mon, 11/11/2013 - 13:45 | 4143009 Wahooo
Wahooo's picture

You must be lazy.

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