For the World's Wealthy, A Setback Most Slight

The global economic collapse, says the first in-depth survey of grand fortune since last September, has left the world's wealth just as intensely concentrated as ever.

Thirteen years ago, two firms that manage the wealth of the world’s wealthy — New York’s Merrill Lynch and the Paris-based Capgemini — began publishing an annual scorecard that tracks just how many wealthy people inhabit our globe and just how many trillions these wealthy have at their ready, available to invest.

[1]Year after year, the two firms tracked these trillions piling ever higher and higher. At 2007's close, their World Wealth Report last year pronounced, our globe’s “high net worth individuals” held a combined $40.7 trillion — and that total didn’t include the value of the primary homes where these “HNWIs” lived or the art they hung on their walls or the jewelry they hid away in their safes.  

Last week, the good news ended. In 2008, Merrill Lynch and Capgemini informed the world Wednesday, the global population of high net worth individuals — people with at least $1 million in investable assets — fell by 14.9 percent. The combined wealth of these individuals sunk even further, dropping 19.5 percent.

The super rich, notes the 2009 edition of the annual World Wealth Report [1], did even worse. The ranks of “ultra” high net worth individuals — people worth at least $30 million — fell by just under 25 percent. These ultras, as a group, lost nearly 24 percent of their financial wealth.

The new Merrill Lynch/Capgemini world wealth scorecard dubs these declines “unprecedented,” and media reports have been echoing that message around the world. “Credit crunch takes toll on super-rich,” headlined [2] one international business daily last week. “Rich list shrinks,” read [3] another.

But these headlines — and the new World Wealth Report — miss the more fascinating story in the latest numbers on global fortunes. Last year’s meltdown of the global financial system certainly did put a dent on grand fortunes. Yet despite that meltdown, the worst economic collapse since the 1930s, the holders of the globe's grandest fortunes remain incredibly fortunate.

The world’s high net worth individuals turn out to have ended 2008 with $32.8 trillion in wealth, not much less than the $33.4 trillion they held at the end of 2005. In other words, 2008’s great meltdown cost the world’s wealthy the gains they registered in 2006 and 2007 — and nothing more.

These wealthy, especially those individuals who fall into the World Wealth Report “ultra” high net worth catgeory, continue to hold a stunningly disproportionate share of the world’s wealth.

About 80,000 individuals worldwide qualify as ultras. These super rich make up roughly 0.001 percent of the world’s population. They hold, even after the 2008 economic collapse, 10 percent of our planet’s entire wealth [4].

These wealthy, to be sure, did “scale back” some on their personal spending in 2008. In the United States, home to 28.7 percent of the world’s high net worth individuals, fine art auction sales totaled only $2.9 billion in 2009, “down $1 billion from 2007,” the new World Wealth Report relates, and U.S. sales of Lamborghini luxury cars dropped 21 percent last year.

But the amount of cash sloshing in wealthy pockets, meltdown notwithstanding, remains enormous. In December 2008, the new World Wealth Report observes, one historic diamond gaveled off in London for $24.3 million, “the highest price for any diamond or jewel ever sold at auction.”

[5]The analysts at Merrill Lynch Global Wealth Management and Capgemini see more records ahead. They note that the last bump on the wealth accumulation road, the 2001 bursting of the tech bubble, proved only a temporary brake on the concentration of global wealth. Between 2002 and 2007, the value of the world’s high net worth individual fortunes soared a blistering 9 percent per year.

The World Wealth Report analysts aren't anticipating that the world’s global political leaders will do anything that might jeopardize a repeat of this uptick. Capgemini and Merrill Lynch, the report sums up, “expect the recovery in HNWI wealth to be similarly robust this time around.”

But these analysts, in their previous World Wealth Reports, failed to see last year’s global financial meltdown coming. If a global movement to more equally distribute the world’s wealth were on the way, they’d likely be among the last to see that coming, too.

Sam Pizzigati edits Too Much [6], the online weekly on excess and inequality.