They're Reading The Blog -- "Lost Decade" -- September 26, 2018 -- The Investor Class Vs The Saving Class

Updates

Later, 11:39 p.m. CDT: could someone please provide a graphic of income disparity when the oil barons, the bank barons, and the rail barons owned the US -- let's say, about 1927, or thereabouts? Once I see that graphic, maybe I'll take the current concern about income disparity a bit more seriously. If one can't find that graphic, I would settle for a graphic of current income disparity in ... oh, let's say ... ah ... Venezuela. Cuba. North Korea. Siberia. China. Bangladesh. Syria. Palestine. Paris. NYC. San Francisco. Williston.

Original Post 

We'll never know who first mentioned the phrase "lost decade," but I know I first used it before ever seeing anyone else talk about it. And then the two "lost decades" of course (Bush II and Obama). There are even three "lost decade" tags at the bottom of the blog, a tag I haven't seen elsewhere.

And now we see it again, a reference to the "lost decade":

Back in March, 2018, the German bank then warned that the "liberal world order" is in jeopardy.

Fast forward to today, when Bank of America strategist Barnaby Martin tackles the thorny issue of ascendant populism, which he attributes to the "lost decade" following Lehman's collapse and what he dubs the "era of hubris" - a time when the richest 1% has seen its collective wealth surpass $100 trillion.

Martin begins by reminding us that a decade ago, "the collapse of Lehman Brothers sent shock waves through financial markets" to which the response was an unprecedented amount of central bank support, both in terms of its size and creativity.
And as we have observed on countless occasions, with central banks as a tailwind, financial markets have outperformed real assets over the last decade. Even so, the dichotomy in many cases is staggering:

Simply said, the last decade has seen those who hold financial assets become richer, as markets have lurched higher; meanwhile those without such assets - the vast majority of the middle class - have been increasingly left behind, however, even as wage growth remained stagnant and indebted governments have struggled to provide strong social support. As a result, a great wave of populism emerged as "issues such as wealth and income inequality have started to polarize societies much more."

The next chart shows in staggering fashion just how “rich” the rich are today, especially when compared to some other big numbers and markets. According to BofA estimates the wealth of the top 1% globally has surpassed $100 trillioin now…a number greater than the sum of the big-4 central bank balance sheets, current world GDP and the cost of the ‘07/’08 global financial crisis, for instance.

By the way, I found the article incredibly interesting and I loved the graphics, but I failed to really get a feeling for what the author was trying to say. The writer seemed to have stated the obvious but then failed to come to any conclusion of where this was all headed.

Having said that, the nuanced statement about China near the end, in my mind, was most important. There's a reason China is not putting tariffs on Apple. I'm still waiting to read stories about Chinese bankers jumping out of windows.