I read a brief article in the WSJ this past week about how there's a cycle of bubbles that investors themselves create. The basic premise is that investors pour financial capital into an industry on the premise that asset prices will rise. As capital is poured in, the asset prices of course rise so it's a self-fulfilling prophecy. Then, when the bubble bursts in that industry, investors make up their losses by pouring their money into a different sector, creating another bubble, more artificially high asset prices, another bust, and the need for yet another bubble. So where's the next bubble? Alternative-energy!
So there's rich, and then there's super rich. I recently read an article in the WSJ about the top 400 taxpayers based on income. Pretty incredible statistics. Those top 400, or what they call the "Fortunate 400", pulled in $85.6 billion in income in 2005. That's over $200 million each ... in one year! Here's a quick graphic to drive that home: Very impressive. There's all the obvious jaw-dropping statistics to go with that. For instance, to make the cut to be in the 400 you had to pull in at least $100 million. With an average of $200 million, that means there's people pulling in well over that number. Obviously, quite crazy numbers, and generally speaking not necessarily anything to be concerned about. I'm all for capitalism. But one of the more disheartening statistics was that adjusting for inflation, the minimum income to make the cutoff into the Fortunate 400 has nearly tripled since 1992. That's probably not a good sign as I imagine that...
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