Jan
2025
Mr Brightside: The Rich Just Keep Getting Richer….
DIY Investor
21 January 2025
“Now we may not know, huh
Where our next meal is coming from”
Ahead of Trumps inauguration as President there was a rally for the faithful. One attendee was Irving King, 49, from Washington DC, who had come to see wrestler Hulk Hogan! Irving said: “Trump is on the right track because we need change. I hope he will make it a little easier for us to pay for our groceries and our bills.”
From the gritty reality of Main St we turn to La, La Land; a report by Oxfam titled Takers Not Makers found that the wealth of the world’s billionaires grew by $2tn (£1.64tn) in 2024, 3x faster than in 2023, amounting to $5.7bn a day.
As a result the world is now on track to have five trillionaires within a decade, a change from last year’s forecast of one trillionaire within 10-years.
Trump is expected to include up to 13-billionaires in his team of close advisers, including the Tesla and SpaceX chief executive, Elon Musk, and to offer large-scale tax breaks to the wealthiest US citizens.
This marriage of politics and riches is somewhat ironic given that Trump rages against elites. Elon Musk, the first person whose net worth has passed $400bn, says that citizens will face “temporary hardship” as his department of government efficiency slashes public spending.
At the same time, the number of people living under the World Bank poverty line of $6.85 a day has barely changed since 1990, and is close to 3.6 billion – equivalent to 44% of the world’s population today. One in 10 women live in extreme poverty (below $2.15 a day), which means 24.3 million more women than men endure extreme poverty.
Oxfam warned that progress on reducing poverty had ground to a halt and that extreme poverty could be ended 3x faster if inequality were to be reduced.
‘the number of people living under the World Bank poverty line of $6.85 a day has barely changed since 1990, and is close to 3.6 billion’
Globally, the number of billionaires rose by 204 to 2,769. Their combined wealth jumped from $13tn to $15tn the second-largest annual increase since records began. The wealth of the world’s 10 richest men grew on average by almost $100m a day and even if they lost 99% of their wealth overnight, they would remain billionaires.
The UK has the highest proportion of billionaire wealth derived from “monopolies and cronyism” among G7 countries. In the UK, wealth climbed by £35m a day to £182bn in 2024, it said.
The report concluded that “huge sums of money could be raised, to tackle inequality here in the UK and overseas and provide crucial investment for our public services. For the first time, with the groundbreaking G20 agreement to cooperate on taxing the world’s super-rich [last July], there is genuine momentum to implement fairer taxation globally.”
Ironically, only last week the Tory leader, Kemi Badenoch delivered a speech in which she warned that, “We are all getting poorer. Politicians across all parties have not told the truth about this and instead keep prescribing quick fixes that are actually making things worse.”
The speech was billed as the Conservative leader confronting the party’s mistakes in government, whilst there was no actual apology, she admitted that the party had offered policy without a plan, including on Brexit and net zero.
Badenoch did not say that was the fault of the Conservatives, but was “broader than one party, one leader, or one period of government”.
Given that one party was in government for 15-yrs they must bear much of the blame. However, as this column has been at pains to point our over a number of years, the faults can be traced back to 1980, and possibly even earlier.
She is wrong to say “We are all getting poorer”. The past 40-yrs have been very good for the top-10%, and even better for the top-1%.
Depending on your view this was either a cleansing exercise or laying the blame at everyone’s door but her own. It should be noted that she first took a governmental position in July 2019, so was part of the shit-show for 5-years.
Nonetheless, Badenoch said that the Conservative party under Theresa May and Boris Johnson had failed to plan for Brexit and had promised low immigration when the numbers were rising.
“I will acknowledge the Conservative party made mistakes. We were making announcements without proper plans. We announced that we would leave the European Union before we had a plan for growth outside the EU.
“We made it the law that we would deliver net zero by 2050, and only then did we start thinking about how we would do that. We announced year after year that we would lower immigration but despite our efforts immigration kept going up.”
Last week was somewhat of a chastening time for the Tories. It was also revealed that they spent £134m on IT and data systems for the Rwanda asylum scheme. This was the second largest cost-factor within the overall spend of £715m in little over two years. The winner being the £290m handed directly to the Rwandan government.
‘It was also revealed that they spent £134m on IT and data systems for the Rwanda asylum scheme’
The £134m spending on IT programmes was not disclosed as part of a breakdown of spending released by the Labour government last month because it was grouped with a wider £280m pool of “other fixed costs”.
Within this was also £87m spent on staff working directly on the scheme who have since been redeployed to other tasks. A further £57m spent since 2022 was classed as “programme and legal costs”, which covers the court battle that culminated in Supreme Court judges declaring the Rwanda scheme unlawful in 2023, as well as the Home Office’s fight against individual challenges brought by selected asylum seekers.
Then there was the new that at least half of the 40 new hospitals pledged by Boris Johnson to be ready by 2030 will not be built for many years.
Wes Streeting, the health secretary, will blame the Conservatives for bequeathing Labour a huge infrastructure project that was budgeted only until this March and for which costs have soared to an estimated £30bn.
Then there is the old Tory standby, the pensions triple lock.
Kemi Badenoch on an LBC phone-in suggested she could back a major policy shift away from the universal promise introduced under her party that the state pension will rise each year by whichever is highest out of 2.5%, inflation, or earnings.
When asked during the phone-in whether she would look at the triple lock, Badenoch said: “We’re going to look at means testing. Means testing is something which we don’t do properly here.”
Interestingly, she then criticised the Labour government’s move to means-test the winter fuel payment, saying it meant “people who are actually on the breadline actually have had their winter fuel payment taken away”.
There is a difference I am sure, but I am struggling to see it!
From the government perspective the rise in Gilt rates wasn’t so much an acute domestic crisis as confirmation that the UK economy is chronically weak.
‘the rise in Gilt rates wasn’t so much an acute domestic crisis as confirmation that the UK economy is chronically weak’
Instead of the promised “Change”, the result of low growth and high prices continue to assault peoples standards of living. Looking at the Office for Budget Responsibility’s last economic outlook, published to coincide with the October budget, households’ take-home pay is set to be squeezed every year between 2025 and 2028. This comes hard on the heels of the longest squeeze on households since the Napoleonic wars.
Adding to the pressure on UK government bonds is the BoE’s programme of “quantitative tightening”, selling back tens of billions pounds worth of the government bonds it bought after the GFC. This see the Bank continuing to “normalise” after years on zero interest rates. The timing of this isn’t clever, as the Bank is selling lots of gilts into a falling market while the government is also issuing gilts means deluging buyers, possibly driving down prices and therefore driving up rates.
It would be sensible for chancellor Reeves to ask the Bank to be more circumspect in its trading, this could help the Bank keep rates lower and closer to the benchmark. Something of this nature would boost the economy and keep the Bank and the Treasury facing in the same direction.
There has been attempts from the Tory media to liken the result Gilts weakness to that of Truss’s unfunded budget mania. Whilst Labour are facing the same issues as other major economies, Truss’s debacle was a self-made, local event.
Truss failed to understand that change in Britain requires cleverer politics: to think about what your public needs, argue for it, and to build institutional backing. Labour’s leadership unfortunately appears to have learned from her is that you need less politics, more rules, and bending to what you think markets want. As a result, they find themselves politically paradoxically close to the Truss agenda.
‘Needles to say the Tories are likely to continue selling their own tin of magic beans.
All in all, this looks ominously samo, samo, and will deliver samo results! Oh well….. ‘
Truss’s goal was the same as Starmer’s : a growth plan. She hated regulation, and wanted to rip up the planning system. Just like the Labour PM this week, she loved AI and thought the UK enjoyed “a unique position to lead the charge on this”. Ironically, Labour, more specifically Stermer and Reeves, find themselves fundamentally the same battle as Truss; “growth, hard hats – and spanking regulators and politicians who get in the way.”
This will provide Badenoch the opportunity to argue that Starmer’s pledge to fix public services without putting up ordinary people’s taxes, isn’t going to happen, as the government is now struggling with ominously flat GDP growth. She will also take delight in accusing Reeves of being panicked into accepting whatever revenue-raising ideas the Treasury throws her way.
It will also be interesting to see if Badenoch decides to challenge Farage’s promises of utopia with no explanation as how to how that might be achieved .
Needles to say the Tories are likely to continue selling their own tin of magic beans.
All in all, this looks ominously samo, samo, and will deliver samo results! Oh well…..
“
We got a thousand points of light
For the homeless man”
The latest Oxfam data shows just how fast the centi-billionaires are piling up the dollars. It is estimated that close to a trillion dollars will be sitting with Trump during his inauguration ceremony. The court of King Donald will be full of robber barons, oligarchs, just like his mate Putin.
Whilst the rest just hope they can pay the mortgage. Still that won’t change, in fact, arguably, it will get worse as Trump’s tariffs and tax cuts fuel inflation, keeping interest rates, and therefore mortgage rates high. Still, look on the bright side, soon Musk will have half-a trillion all to himself!
I was both amused and irritated to see the jumped up, wannabe , pound-shop that is Farage spreading his inane, insane grin during last evenings rally.
In the UKs version of La, La Land, Badenoch came close to apologising, but it wasn’t her fault anyway.
However, lots more data showed what a waste of £700m their Rwanda fiasco was. Still, today that’s just lunch money.
And, then there was the Boris hospitals, starring Harry Potter, and just as fictional.
Lastly, there is Labour’s economic policy, growth, baby, growth. Remarkably similar to Liz Truss, really. Same, but different, not quite as foolish but equally doomed to failure.
Why? Because, there are no pools of capital to fund the new exciting businesses. The banks aren’t there, funds can’t help because they are private companies, private equity might but they will simply screw you over. Whereas, in the US funding is plentiful. Perhaps we should become the 51st state, and drop this whole special relationship charade?
Lyrically, we start with “The Only Way Is Up” by Yazz, and play out with the great Neil Young and “Rockin’ In The Free World.”
Enjoy!
Philip.
@coldwarsteve
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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