What’s spooking the stock markets this week? It may have something to do with the world’s billionaires hoarding a whopping $1.4 trillion in cash. If that doesn’t drive the final silver stake into the cold, dead heart of that fading rich-people-as-job-creators myth, we don’t know what will.
MSN Money reports:
According to the new Billionaire Census from Wealth-X and UBS , the world’s billionaires are holding an average of $600 million in cash each — greater than the gross domestic profit of Dominica. That marks a jump of $60 million from a year ago and translates into billionaires’ holding an average of 19 percent of their net worth in cash.
The authors of the Billionaire Census suspect the world’s 2,325 billionaires are hoarding an average of $600 million in cash each because these #poorbillionaires don’t know where to put it.
“This increased liquidity signals that many billionaires are keeping their money on the sidelines and waiting for the optimal moment to make further investments.”
Oh, and Simon Smiles — chief investment officer for Ultra High Net Worth at UBS Wealth Management and an author of the report — adds that these delicate, sensitive creatures remain skittish because of that 2008 global economic crash their greed helped cause.
“The apparent safety of cash, reinforced by the painful psychological experience of the 2008-09 global financial crisis and the subsequent troubles within the European Monetary Union, likely reinforces the tendency to favor this cautious allocation strategy,”
This writer would love to tell these billionaires where to shove their cash, but also realizes our economy desperately needs that $1.4 trillion to see the light of day.
Why don’t stock market investments seem likely to pay off? Because — as mere multimillionaire Nick Hanauer points out — rich people don’t actually “create jobs.” Consumers do. And consumers can’t afford buy the goods and services required for growing the economy and fueling the next big stock market boom, because these cagey billionaires are hogging all the money for themselves.
Billionaire Census facts.
Here are some more fascinating facts from the Billionaire Census.
- 155 new billionaires: While middle class incomes continue falling or remaining stagnant, our winners-take-all economic system has minted 155 new billionaires since 2013 — a growth of 7.1 percent. If that rate of growth took place somewhere in an adult human’s body, it would be diagnosed as a malignant tumor.
- 2,325 billionaires total: 2014 marks the highest number of billionaires ever with 2,325 of them around the world with a combined net worth of U.S. $7.3 trillion.
- Guess where the most billionaires live?: 571 of these billionaires live in the U.S. This is hardly surprising, given that our nation’s level of income inequality is the highest since 1928 — the year of the stock market crash that caused the Great Depression.
- They’re mostly “self-made”: Of course UBS and Wealth-X want to portray their clients in a flattering light, so they claim 55 percent are “self-made,” and 26 percent more significantly grew fortunes they’d already inherited for a seemingly industrious total of 81 percent. That’s if you consider raping and pillaging the world’s economies to be industrious and productive activities.
Billionaires, on average, hold $600 million of their net worth in cash!
Watch Wealth-X’s self-congratulatory video with the low-down on their select billionaire clientele.
Featured image: Risto Turunen via the London Free Press.