[Marxism] The rising BRIC bourgeoisie

Marvin Gandall marvgandall at videotron.ca
Wed Jun 25 04:40:09 MDT 2008

Ranks of Rich March From West to East
Millionaire Population Grew Much Faster
In Emerging Markets Than in U.S. in '07
Wall Street Journal
June 25, 2008

The U.S. is losing its market share of global millionaires.

The population of millionaires grew five times as fast in emerging markets
as it did in the U.S. last year, according to a survey released Tuesday.
That was the largest divergence between the U.S. and the big emerging
markets since the comparisons were first published in 2003.

The number of millionaires in Brazil, Russia, India and China jumped 19% in
2007, compared with growth of 3.7% in the U.S., its slowest growth since
2002, according to the World Wealth Report, produced by Merrill Lynch & Co.
and Capgemini.

The U.S. still dominates the millionaire economy world-wide. It has more
than three million financial millionaires, defined as those with investable
assets of $1 million or more. That's up 100,000 from 2006.

Yet emerging markets captured the bulk of the millionaire growth last year,
with Brazil, China, India and Russia adding 133,000 new millionaires, for an
817,000 total. India's millionaire population grew 23% last year, the
fastest in the world.

After climbing for years, America's market share of the world's millionaires
declined slightly, to 30% in 2007 from 31% in 2006. Its share of millionaire
wealth fell to 29% in 2007 from 31% in 2006, and is expected to fall further
in the next five years, according to the report. Europe's market share of
millionaires has fallen even faster in recent years, to 31% in 2007 from 36%
in 2002.

Meanwhile, the millionaire market share for India, Brazil, Russia and China
has increased to 8% from 6% in the past five years.

The numbers point to an economic reality: Tomorrow's rich are more likely to
come from the East than the West.

The surge in oil and commodity prices, the shift in financial flows to
faster-growing emerging markets, the higher savings rates abroad and the
decline in the dollar have all fueled a boom in new millionaires and
billionaires in countries once known for their extreme poverty.

At the same time, America's wealth-creation machine is sputtering because of
the financial crisis, debt crunch and decline in real-estate prices.

Impact on Economies

While the market share of millionaires may seem trivial, it has
ramifications for the global economy.

The increasingly Eastern face of wealth could reshape investment and
spending in the U.S., as well as philanthropy and entrepreneurship. The more
than $40 trillion held by the world's millionaires will move increasingly
outside the U.S., since the new millionaires prefer to invest in their own
countries. Investments by the world's millionaires in North America are
expected to decline to 39% of all investments in 2009 from 42% in 2007, the
report said.

The shift is also likely to accelerate economic inequality world-wide, since
the fastest growth in millionaires and billionaires is occurring in
countries with an even larger gap between rich and poor than in the U.S.

According to the World Wealth Report, wealth is becoming concentrated
increasingly among the rich -- especially the superrich. The population of
the superrich, or those with $30 million or more in investable assets,
increased 8.8% last year globally, while their fortunes grew by a
disproportionate 14.5%.

Indians already hold four of the top eight slots on the Forbes billionaire
list, while Mexico's Carlos Slim has surpassed Bill Gates to claim the No. 2
spot. Warren Buffett is No. 1; Mr. Gates is No. 3.

India's Wealth

India was the biggest overall winner last year. Its population of
millionaires surged by 23%, up slightly from a 21% rise in 2006. China saw
growth of 21%, followed by Brazil with 19% and Russia with 14%.

The main drivers for wealth creation are gross-domestic-product growth,
financial-market performance and liquidity. The flood of money pouring into
overseas stock markets has created a boom in initial public offerings and
stock that can be used for mergers.

That has fueled a rise in what private bankers call "liquidity events,"
where a company owner or executive can cash in his holdings to become a
millionaire or billionaire.

"Financial markets are deepening in these countries, and that is allowing
many entrepreneurs to capitalize their businesses," said Harvard economist
Kenneth Rogoff.

The wealth shift is also redrawing the competitive map for the luxury
economy and the vast array of companies that sell to the rich.

Sotheby's estimates Russian buyers of Impressionist and Modern art at its
February auction in London accounted for 15% of sales, compared with 9% in

High on the Seas

Mega-yacht makers, once devoted largely to the U.S. and Europe, are now
doing a brisk business in Russia, India and Brazil. Burgess, the
yacht-brokerage firm, said that emerging markets will probably account for
half of its business in five years, compared with about a third today.

"When it comes to the very big boats, India is the next Russia," says
Jonathan Beckett, chief executive of Burgess.

Gulfstream, the private-jet maker, is deriving an increasing share of its
growth from outside the U.S. For the first time in the company's 49-year
history, orders for jets from North American buyers in 2007 were eclipsed by
overseas buyers, even though North American orders were up 30%, a spokesman

In the first quarter of 2008, orders from overseas are outpacing North
America by 56% to 44%.

Many of the new buyers are "unaccustomed to waiting," says Robert Baugniet,
spokesman for Gulfstream, a subsidiary of General Dynamics Corp. "When
somebody hears the G550 they ordered won't be delivered until the first
quarter of 2013, they rattle their briefcase full of cash and don't
understand why they have to wait."

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