the high-beta rich - robert frank

[...]... of the lasting legacies of the Great Recession may be that Richistan was further removed from America The stunning fall of the rich may have brought them momentarily closer to the non -rich But Richistan seems more foreign than ever, as many Americans lose hope of ever getting rich themselves In our post-TARP, deficit-ridden age, many see the rich as the winners in a zero-sum game of global wealth Richistan... from the wealthy The rich would take out a jet loan, then give the bank their $200 milllion to manage Banks gured the rich would always have money to pay back their loans because, well, they were rich What they failed to take into account was the rise of high-beta wealth Many of the the new millionaires were borrowing to support their businesses and lifestyles They were also products of an ever-rising... for the roller-coaster rich But we should worry for the rest of the country If the national risks of high-beta wealth had a simple equation, it would look like this: America’s dependence on the rich + great volatility among the rich = a more volatile America As go the high-beta wealthy, so goes the rest of the country While trickledown economics may be widely dismissed as a myth, I will show in the. .. by Kevin Phillips; The Winner-Take-All Society, by Robert H Frank (no relation); and Winner-Take-All Politics, by Jacob Hacker and Paul Pierson The rise of high-beta wealth introduces a new side effect of inequality: With the growing dominance of the rich has come growing contagion from their nancial manias In the coming pages, we will see how high-beta wealth is wreaking havoc on the consumer economy,... The high-beta rich had become like the human tech stocks of our economy, prone to violent swings and rapid cycles of value creation and destruction To me, this new personality type and the changing character of American wealth have largely gone undiscovered This book aims to chronicle the rise and occasional fall of the high-beta rich and how they impact the rest of us THE AGE OF HIGH-BETA WEALTH The. .. just nished their morning row “Nice shorts,” Randy chuckles Ken and Randy walk onto the dock and start inspecting the boats They pass two Sea Rays, but neither is their target They walk down to one end, then the other No luck At the very end of the dock, Randy spots the tip of a boat moored around the corner It’s blue and white, with a long bow platform, just like the one they’re looking for They glance... fortunes, the deeper economic forces that lifted them to the top, and the changes that wealth has brought to their lives and values By following the trajectory of the rich, who increasingly shape the direction of the rest of the country, we might be able to get a clearer picture of our own nancial and political path In that spirit, I started reporting on the serial blowups of the super -rich during the nancial... can see, the top 1 percent did far better than the rest of America during the recent boom times, telling the well-known story of rising inequality and the outsize gains of the few at the top Here is the other, more important chart It shows the relative income losses during downturns: The chart shows that the top 1 percent led the country in income losses during the past three recessions In the most... type in the world of wealth They were more manic in their earnings and spending, and they were by-products of a new system of nancial incentives that rewarded extreme risk-taking, borrowing, speculation, and spending I call them the high-beta rich In nancial markets, the term high-beta usually refers to a stock that experiences exaggerated swings relative to the broader market Tech stocks and start-ups,... guidance of the economist John Kenneth Galbraith, who wrote, “Of all the classes, the wealthy are the most noticed and the least understood.” As our economy becomes increasingly dominated by the wealthy—by their incomes, their spending, their taxes, and their political in uence the rich merit understanding beyond the size of their mansions and private jumbo jets We need to understand the basis of their fortunes, . chronicle the rise and occasional fall of the high-beta rich and how they impact the rest of us. THE AGE OF HIGH-BETA WEALTH The rise of the high-beta rich is important for three reasons. First, the. permission. Library of Congress Cataloging-in-Publication Data Frank, Robert, 1968– The high-beta rich : how the manic wealthy will take us to the next boom, bubble, and bust / Robert Frank. —1st ed. p. cm. 1 call them the high-beta rich. In nancial markets, the term high-beta usually refers to a stock that experiences exaggerated swings relative to the broader market. Tech stocks and start-ups,