In the jungle or in the zoo?
In the jungle or in the zoo?
by Christian Savestre, Pour, June 4, 2019
The crisis of 2007-2008: It was they who provoked it. “Too big to fail,” as they said of the banks. “Too big to jail,” for those who managed them. Furthermore, protection from all risks: it is countries, and thus citizens, that saved the banks. But citizens, what did they get in exchange? They didn’t become owners of banks!
Now, the Yellow Vests protest, it’s true, has lasted a bit too long. The ultra-rich say to themselves anyway that Macron could have been a little more efficient—he who boasts so much about efficiency. But frankly, what do the ultra-rich finally say to each other? They say a bit like Chirac said vulgarly: “It touched some a bit, but it didn’t make others move. In any case, if the movement really took off and Macron were weakened a little, they already have a solution ready. You don’t know about the three “S”s: “Safety locations.” But they know about it.
The Wealth Report 2019. 13th Edition. Knight Frank.
by Christian Savestre, Pour, June 4, 2019
translated by Dennis Riches
As he was preparing to return
from his exile in the United States, the Czech filmmaker Milos Forman declared,
“I live in the jungle and I am preparing to return to the zoo.” This metaphor
allowed him to contrast the liberty of the West (the jungle) with the isolating
security of the communist Eastern Bloc (the zoo).
And what if, after forty
years of uninterrupted neoliberalism, the jungle has become the zoo, and the
zoo has become the jungle? It’s an inverted zoo in the heart of which an
infamous minority enjoys exorbitant privileges in complete security, to the
detriment of all others who are assigned to inhabit the jungle where life is a
battle of all against all inflicted by the inhabitants of the zoo. A visit to
the zoo of the rich and the ultra-rich (so little examined by the dominant
media) will clarify much for us. A visit to the jungle is not necessary, as the
economic and social reality has produced the familiar violence and other
devastating effects on a day-to-day basis.
What do we find in the zoos
of the ultra-rich?
1. Let’s start with a brief
look. The world of the rich is very unequal. In this world too, the growth of
inequality of wealth is on display. You doubt this? To give you an idea, learn
at first how to use the terminology, in “globish”, of these privileged ones who
are separated among themselves into three classes:
The
HNWI (High Net Worth Individuals): those who have more than $1 million of net
active assets, with debt obligations deducted, and not counting the value of
their principal residence, collectible objects and consumable objects that last
less than three years.
The
UHNWI (Ultra High Net Worth Individuals): Those who have more than $30 million
in net active assets (as per the defining terms above).
The
billionaires: Those who have more than $1billion in net active assets (as
per the defining terms above).
Between 2013 and 2018, the
number of HNWI, the millionaires, increased 13% to reach a total of 19.6
million people. During the same period, the number of UHNWI, the ultra-rich,
increased 18% to reach 198,342 individuals. As for billionaires, their number
increased by 55% and reached 2,229 individuals, of which 26 billionaires have
close to $1.4 trillion ($1,400 billion), as much as what is owned by the
poorest half of the world’s people. Wealth is continually concentrating, even
among the wealthy. In the world of the rich, the millionaire is quickly
becoming considered as poor. The zoo of the rich, ultra-rich and billionaires
includes a total of 19.8 million people, or 0.26% of the world population. The
jungle of everyone else is home to 7.6 billion people.
2. The world of the rich has
good prospects for the period between 2019 and 2023. The number of millionaires
will increase by 19% to reach 23.4 million people. The ultra-rich will see
their numbers increase by 22% and thus total 241,053 people. Billionaires will
see an increase of 21% to reach a total of 2,696. So there is danger ahead,
many of them worry. Are we going to see growing inequality among the wealthy?
3. The ultra-rich know how to
avoid major crises. In 2002, they were spared from damage during the popping of
the internet bubble and even increased their wealth by 3.6% when the NASDAQ
fell by 32%. The subprime crisis in 2007/08 did not affect them as much as one
would believe. Capable of reacting quickly thanks to the evolution of financial
management (the famous agility promoted by the powerful, and notably by the
banker-president, Emmanuel Macron), they were able to at least escape the
collapse of the stock market by moving their wealth into fixed income assets or
converting their assets to cash, or in speculating on the collapse of the
markets. Keep in mind that the rich keep 35.4% of their active assets in cash,
which amounts to $600 to $900 billion. The rest are divided thus: 33% in
personal holding companies, 25% in stocks and other investments, 6% in real
estate and luxury goods (yachts, airplanes, cars, art, jewels).
4. The ultra-rich anticipate
the risk of a collapse occurring because of the present low rate of returns and
the probable end of “quantitative easing”.[1] They
diversify their investment strategies and are in search of specific
opportunities. Nothing, absolutely nothing, escapes their attention, even those
that might be considered atypical, such as the cannabis business, for example.
Collectible objects also constitute an alternative source of investment.
Whiskey is one such example. Direct flights from Beijing to Edinburgh have
become a thing. The sales of whiskey in China and India have increased 40%, and
the sale price of one collectors’ bottle of whiskey broke a record in 2018 at
1.2 million pounds sterling.
5. The media tell us
constantly that the markets are anxious whenever there is a little fluctuation
in the stock market that is difficult to explain or when there is a social
movement that they consider to be vulgarly populist. It seems there is nothing
to this, which is admitted even by precisely those who are the principal
actors. In effect, the surveys done on the ultra-rich show that they are
completely confident that their fortunes will continue to grow in the years to
come. This shows the high level of confidence they have about the control they
exercise over the wealth produced in the world. In the face of those who
predict the next financial crisis will make the last one in 2007/2008 look Lilliputian,
the managers of these fortunes remark that nothing is less certain but there
are always countries that escape damage. They cite Australia as an example
which has not known a crisis since the beginning of the 1990s. Confronted with the possibility of a recession that will
spread in the United Kingdom because of Brexit, they see an opportunity (for
investors who have the privilege of investing for the long-term) to speculate
on values in the United Kingdom which have dropped because of Brexit. Populist
movements, as they are called, don’t concern them, either, whether they have
leaders or not: In effect, if such movements persisted in a country like
France, for example, the ultra-rich have already identified a zone in which
they could readily take refuge and invest. They are called “S zones” for “stability
locations”: Singapore, Scandinavia and Switzerland. Even the change of energy
policies of states in the face of a little power exerted by the petrol states
is no concern for them. To the contrary, this change constitutes an opportunity
to invest in shale gas in the United States, or in the exploitation of cobalt
in the Democratic Republic of Congo etc...
6. The dominant media tell us
Brexit is going to create major chaos. This is not at all the opinion of the
ultra-rich. Despite the publication of multiple economic studies, each more
catastrophic in its conclusions than the last one, the ultra-rich consider
London
will remain as the world capital of global wealth,
ahead of its sole rival, New York, whether it is a matter of a hard Brexit or a
negotiated deal, or no Brexit at all. It must be said that this is a
particularly authoritative view because London is the city that has the highest
number of the ultra-rich (4,944). If, in any case, Brexit produces some harmful
effects, the ultra-rich already have access to opportunities offered by what
they call “the New Vikings” or the “New Hanseatic League” made up of eight
northern European countries which together could usefully replace, if
necessary, the role played by the UK in balancing France and Germany.[2] For them, these countries, notably Sweden, Finland,
Denmark and the Netherlands, present all the characteristics which they are
fond of: strongly founded liberal values, political stability and “safe-haven”
qualities. These are literally qualities that make them places of refuge, as is
understood by the initiated.
7. The
ultra-rich are particularly confident about the fact that they will always find
states where governments will be sufficiently welcoming, encouraging them to
come shelter a part of or all of their fortunes. The example of Italy is
frequently cited. For a forfeiture of €100,000, wealthy tax evaders
will be able to transform themselves into “migrants” of fortune and taste again
the charms of the dolce vita. Certainly, some welcoming countries
like Singapore, Australia and New Zealand might set up some obstacles to
certain markets such as real estate, but this should not discourage those with
large fortunes who never lack means, all the more so since the “second
passports” market is often a major opportunity.
8. The ultra-rich are perpetual
migrants. Is this a paradox? What to make of this great
world voyage by the rich and ultra-rich? Do they run any risks? Do they have
total security? Does their isolated world rule the world? Is the wall of money
unbreakable? Are there not predators hiding at the gates of their sheltered
world? Are they sheltered from everything, including the crises they create?!
Nothing for the jungle and all for the zoo, including its primary function of
safeguarding the species kept there. The jungle has really become the zoo,
and the zoo has become the jungle. What’s more, the zoo has subjugated the
jungle.
__________
In a video supplement to this essay,
Christian Savestre summed up the points above and added that the ultra-rich
have subjugated the people of the jungle in two ways: debt and tax evasion. Furthermore,
they have now discovered a third: convincing the inhabitants of the jungle that
the ultra-rich should be in charge of managing the climate crisis.
Transcript of the video by Christian
Savestre, 2019/06
First of all, what
are the ultra-rich? They are people who have a minimum of 30 million dollars of
fortune, aside from their principal residence. How many of them are there in
the world? There are 19.8 million. And how many other people are there? 7.6
billion! So the proportion is 0.26%—about the same proportion, no doubt a bit more—but
it’s the proportion of animals that are in zoos to those animals that are in
the jungle. And the ultra-rich live in complete security in the zoo. Why?
Because of a peculiar thing about the zoo of the ultra-rich. They have taken
control of the jungle. They take no risks! They impose all the risks on others!
To guarantee that they
take no risks, they have put two ropes around the necks of all the of the
people of the jungle: the rope of tax evasion—we’ve been talking about it for
several weeks-- and also the rope of debt. We’ll speak about it later. And
proving that they assume no risks is extremely simple. Let’s take four
examples.
First example:
crises of the past—economic crises that they caused. But they emerged from them
in good shape. Future economic crises, caused by the bubbles that they have
created but that have not yet burst. They are going to manage them completely.
They have already diversified their investments. Third point: political crises.
No problem. They’re on it. Fourth point: The ecological crisis. It’s a
fantastic business opportunity!
So, they have to be
careful. They have to be sure that in the media there are no discordant voices.
So they bought them all. So, the first point: Crises of the past. Look at the
crisis of 2002, the internet bubble. No problem. They increased their fortunes
3.2% while the Nasdaq index crashed 32%. So that proves they know how to
manage.
The crisis of 2007-2008: It was they who provoked it. “Too big to fail,” as they said of the banks. “Too big to jail,” for those who managed them. Furthermore, protection from all risks: it is countries, and thus citizens, that saved the banks. But citizens, what did they get in exchange? They didn’t become owners of banks!
Future crises? The
bubbles they have obviously created will burst. They know it. But they are
prepared. They vary their investments. And we have to keep in mind that 35% of
their fortune is in cash! So cash, the essential medium of capital—it
circulates. And so it’s a matter of investing in something a bit alternative. There’s
no problem. They already invest a lot in cannabis. Lots of people know it.
Cannabis is a great investment. When you look at the journals of the
ultra-rich, you can’t escape it. You have to go to all the investment seminars
concerned with cannabis! Whisky, it’s the same. Chinese are drinking more and
more of it. Go. Let’s invest in whisky! So they always have a way to save
themselves. Future bubbles: they will manage fine. What’s more, there is
something in particular that we should be aware of: that they get through every
difficulty, including the ones that they create.
Political crises.
Let’s take Brexit. Brexit disturbs only bad economists. Bad economists tell us
what? “It will be a catastrophe!” But the ultra-rich say, “Ah, no. Not at all!”
London? No problem. It will still be the top city in the world! Otherwise,
Brexit or no Brexit, they don’t care. It’s the top city in the world for the
ultra-rich. And far behind is New York! So there are no problems! And they have
reserves. Yes, you don’t think about it, but Brexit will last such a long time
that there will be, as they say, a depreciation of values that drop so far that
there must later be a rebound. So the ultra-rich buy these assets at low value,
and when values rise again, their fortunes will explode upward. That’s what a
capitalist does. He didn’t work, but he gets a big payday.
Now, the Yellow Vests protest, it’s true, has lasted a bit too long. The ultra-rich say to themselves anyway that Macron could have been a little more efficient—he who boasts so much about efficiency. But frankly, what do the ultra-rich finally say to each other? They say a bit like Chirac said vulgarly: “It touched some a bit, but it didn’t make others move. In any case, if the movement really took off and Macron were weakened a little, they already have a solution ready. You don’t know about the three “S”s: “Safety locations.” But they know about it.
What are the three “S”s?
Scandinavia, Switzerland and Singapore. These are the places you should go when
you are ultra-rich and there is a bit of a threat in the place where you have
some money. So that’s an example that shows how they are always one step ahead
because they are very, very mobile. Furthermore, about 30% of them are ready to
move within a year. It is at least quite impressive!
The ecological
crisis? No worries. They’re on it. There are a few billionaires, two of them
well-known—especially the founder of Virgin. I forget his name. He’ll forgive
me. They have created what they call “Team B”. So what’s that, Team B? Well, it’s
Team B because it’s not Team A. So what was Team A? It was the management of
capitalism, where profits were the priority. Now, they explain that Team B is
very different. It’s another game. Now they can no longer found the management
of enterprises on profit. They have to be ‘founded on the well-being of the
people and of the planet.’ This will work. They explain that this will work.
There’s no problem. But, obviously, to do this they will have a lock on the
media. There must not be any discordant voices creating too much of an echo. So
they found the solution. They bought all the mainstream media. All of them! The
billionaires own the media!
There are only
about 2,600 real billionaires in the world. Next to them, the ultra-rich are sort
of poor. And so they control the media, and it’s necessary to put out some
propaganda. So what do you hear? You hear, “The markets are anxious.” Every
time there is a slight disturbance in society, the markets are anxious. In
fact, they are not at all anxious. They are very confident about the evolution
of their fortunes. They all declare that in the next five years, their fortunes
will increase considerably. Moreover, the number of the ultra-rich will
increase by about 25%. You can read that in specialist journals. So, one must
pretend to be anxious. The ultra-rich can’t laugh out loud when large job
terminations are announced, and not small ones but thousands, tens of thousands
of job losses. In fact, they’re laughing inside. You can see it in stock markets.
At that moment they have no way to camouflage themselves. The stock markets are
hot when layoffs are announced. So the conclusion of all this is what? Yes,
power over the jungle has been taken by the zoo.
And the people of
the jungle are already subdued by two ropes—I remind you: those of tax evasion
and debt. And now we see they are in the process of putting another rope around
our necks: the climate! Because if you let them manage the climate crisis, that
is really a third rope that we have around our necks.
Principal sources:
The Wealth Report 2019. 13th Edition. Knight Frank.
MGM Research. Global UHNWI. Population
Analysis 2019. Global Billionaire Population Analysis 2019. Global
Millionaire Population Analysis 2019.
Wealth-X. Applied Wealth Intelligence. High
Net Worth Handbook 2019.
Family Office. Magazine & Events.
Foss, Family Office Advisory.
PwC Global Family Business Survey 2019.
PWM. Professional Wealth Management
(Financial Times Specialist). A Guide to Global Citizenship. The 2018 CBI
Index.
Notes
[1]
Quantitative easing is a “non-conventional” monetary policy
consisting of a central bank buying back a massive amount of debts from
financial institutions, notably treasury bonds and corporate bonds, and in some
cases asset-backed securities such as mortgage-backed securities.
[2]
The New Hanseatic League was created in February, 2018 by the
ministers of finance of the following countries: Denmark, Estonia, Finland,
Ireland, Latvia, Lithuania, the Netherlands, and Sweden. In a joint declaration
they declared “the shared views and values” for what is a form of economic and
monetary union. The name alludes to the old Hanseatic League, a military and
commercial alliance of Northern Europe dissolved in the 16th century.
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