The Super Rich Are Down But Not Out

This latest financial crisis and global recession has been unique in all sorts of ways – from its length and depth, to the fact that almost nobody has come out unscathed. That includes billionaires. While they are usually much better than the rest of us at hanging on to their dosh in troubled times, the latest World Wealth Report from Merrill Lynch and Capgemini found that the ranks of the “ultra high net worth” – that is, people with at least $30 million to invest – shrank by 25 percent this last year. This undoubtedly has something to do with the fact that the super rich were more invested in all those complex, risky securities that have blown up so spectacularly. The plain vanilla rich were hit too, though not quite as hard – the number of people with a mere million to invest shrank by about 20 percent.

The upshot of all this is that the total number of rich people is back down to levels not seen since 2005. But hold the schadenfreude, because a coming boom in emerging market billionaires, led not surprisingly by the Chinese, is expected to kick those numbers up again quickly. It will be interesting to see how this continues to fuel the debate over inequity. The gini coefficient—a measure of the gap between the richest and poorest in a society—is sky high in China (where people with strong ties to the Communist Party control the majority of wealth), and growing in places like India, as well. A recent study by the Asian Development Bank found that as of early last year, a mere 50 billionaires in India controlled wealth equal to 20 percent of the entire country’s GDP, and held 80 percent of the nation’s stock market capitalization. Crony capitalism, anyone?