Why do Social Democrats do what they do?

April 09, 2010

FORBES: CRISIS HITS ONLY LOW INCOME EARNERS, April 1-15, 2010 issue of People's Voice

FORBES: CRISIS HITS ONLY LOW INCOME EARNERS

(The following article is from the April 1-15, 2010 issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to: People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)

By Vlad Grinkevich, RIA Novosti

The current global financial and economic crisis confirms the fact that during economic upheavals the rich get richer and the poor become even more destitute. On March 10, Forbes Magazine carried an updated list of the world's wealthiest people.

As of late 2009, the number of billionaires soared from 793 to 1,011 and their total fortunes from $2.4 trillion to $3.6 trillion (all amounts in US dollars).

The list's authors believe that an increase in the number of wealthy people highlights the end of the recession, but it may also signal the appearance of new bubbles in the economy.

Mexican telecommunications king Carlos Slim Helu opens the list with $53.5 billion. He is followed by last year's leader, Microsoft founder Bill Gates with $53 billion and American investor, businessman, and philanthropist Warren Buffet with $47 billion.

However, this does not mean that Gates and Buffet now have less money than before. On the contrary, they have both increased their fortunes by $13 billion and $10 billion, respectively.

There have also been some tactical changes in the list of Russian billionaires. For instance, ONEXIM Group CEO Mikhail Prokhorov, who has expanded his fortune from $9.5 billion to $13.4 billion in one year, has ceded first place to Vladimir Lisin with $15.8 billion. Lisin, who is Chairman of the Board of Directors at Novolipetsk Steel, came fifth in the rating only 12 months ago.

Despite the crisis, the list of billionaires has grown by 200 people and their aggregate capital has expanded by 50 percent. This may seem paradoxical but only at first glance. This result was predictable, if we recall how governments all over the world have dealt with the economic crisis.

Anti-crisis measures essentially implied massive infusion of money into the economy. The United States alone spent over $10 trillion. Against the backdrop of a global recession, the funding could only be put to good use on stock and raw materials markets, leading to the creation of new financial bubbles.

Consequently, oil prices which had hit an all-time low of $47 per barrel in December 2008, now stand at about $80. Global financial indices are also climbing steadily. The Russian stock market grew by over 100 percent over the course of 2009.

The lists of billionaires and their countries of residence have changed. China, which posted a 8.7 percent GDP growth last year despite the crisis, is now home to 64, rather than 62, billionaires, ousting Russia to third place. Although Russia has suffered a harsher blow from the crisis than most industrial and even developing countries, it now has 62 billionaires, up from 32 in 2008, regardless of the fact that the national GDP has plunged by 7.9 percent by late 2009.

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