Plutonomics

loosecannon

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May 7, 2007
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Citigroup Oct 16, 2005 Plutonomy Report Part 1

SUMMARY
➤ The World is dividing into two blocs - the Plutonomy and the rest. The U.S.,
UK, and Canada are the key Plutonomies - economies powered by the wealthy.
Continental Europe (ex-Italy) and Japan are in the egalitarian bloc.
➤ Equity risk premium embedded in “global imbalances” are unwarranted. In

plutonomies the rich absorb a disproportionate chunk of the economy and have
a massive impact on reported aggregate numbers like savings rates, current
account deficits, consumption levels, etc. This imbalance in inequality
expresses itself in the standard scary “ global imbalances”. We worry less.
➤ There is no “average consumer” in a Plutonomy. Consensus analyses focusing

on the “average” consumer are flawed from the start. The Plutonomy Stock
Basket outperformed MSCI AC World by 6.8% per year since 1985. Does
even better if equities beat housing. Select names: Julius Baer, Bulgari,
Richemont, Kuoni, and Toll Brothers.

WELCOME TO THE PLUTONOMY MACHINE

In early September we wrote about the (ir)relevance of oil to equities and introduced the
idea that the U.S.is a Plutonomy - a concept that generated great interest from our
clients. As global strategists, this got us thinking about how to buy stocks based on this
plutonomy thesis, and the subsequent thesis that it will gather strength and amass
breadth. In researching this idea on a global level and looking for stock ideas we also
chanced upon some interesting big picture implications. This process manifested itself

with our own provocative thesis: that the so called“global imbalances” that worry so
many of our equity clients who may subsequently put a lower multiple on equities due to
these imbalances, is not as dangerous and hostile as one might think. Our economics
team led by Lewis Alexander researches and writes about these issues regularly and they
are the experts. But as we went about our business of finding stock ideas for our clients,
we thought it important to highlight this provocative macro thesis that emerged, and if
correct, could have major implications in terms of how equity investors assess the risk
embedded in equity markets. Sometimes kicking the tires can tell you a lot about the
car-business.

Well, here goes. Little of this note should tally with conventional thinking. Indeed,
traditional thinking is likely to have issues with most of it. We will posit that: 1) the
world is dividing into two blocs - the plutonomies, where economic growth is powered
by and largely consumed by the wealthy few, and the rest.

<32 more pages at link>
 
Citigroup Oct 16, 2005 Plutonomy Report Part 1

SUMMARY
&#10148; The World is dividing into two blocs - the Plutonomy and the rest. The U.S.,
UK, and Canada are the key Plutonomies - economies powered by the wealthy.
Continental Europe (ex-Italy) and Japan are in the egalitarian bloc.
&#10148; Equity risk premium embedded in “global imbalances” are unwarranted. In

plutonomies the rich absorb a disproportionate chunk of the economy and have
a massive impact on reported aggregate numbers like savings rates, current
account deficits, consumption levels, etc. This imbalance in inequality
expresses itself in the standard scary “ global imbalances”. We worry less.
&#10148; There is no “average consumer” in a Plutonomy. Consensus analyses focusing

on the “average” consumer are flawed from the start. The Plutonomy Stock
Basket outperformed MSCI AC World by 6.8% per year since 1985. Does
even better if equities beat housing. Select names: Julius Baer, Bulgari,
Richemont, Kuoni, and Toll Brothers.

WELCOME TO THE PLUTONOMY MACHINE

In early September we wrote about the (ir)relevance of oil to equities and introduced the
idea that the U.S.is a Plutonomy - a concept that generated great interest from our
clients. As global strategists, this got us thinking about how to buy stocks based on this
plutonomy thesis, and the subsequent thesis that it will gather strength and amass
breadth. In researching this idea on a global level and looking for stock ideas we also
chanced upon some interesting big picture implications. This process manifested itself

with our own provocative thesis: that the so called“global imbalances” that worry so
many of our equity clients who may subsequently put a lower multiple on equities due to
these imbalances, is not as dangerous and hostile as one might think. Our economics
team led by Lewis Alexander researches and writes about these issues regularly and they
are the experts. But as we went about our business of finding stock ideas for our clients,
we thought it important to highlight this provocative macro thesis that emerged, and if
correct, could have major implications in terms of how equity investors assess the risk
embedded in equity markets. Sometimes kicking the tires can tell you a lot about the
car-business.

Well, here goes. Little of this note should tally with conventional thinking. Indeed,
traditional thinking is likely to have issues with most of it. We will posit that: 1) the
world is dividing into two blocs - the plutonomies, where economic growth is powered
by and largely consumed by the wealthy few, and the rest.

<32 more pages at link>

I disagree, but at least you bring some debate skills.
 
Plutonomics - The Wealth Report - WSJ

Plutonomics

By Robert Frank

It&#8217;s well known that the rich have an outsized influence on the economy.

The nation&#8217;s top 1% of households own more than half the nation&#8217;s stocks, according to the Federal Reserve. They also control more than $16 trillion in wealth &#8212; more than the bottom 90%.

Yet a new body of research from Citigroup suggests that the rich have other, more-surprising impacts on the economy.

Ajay Kapur, global strategist at Citigroup, and his research team came up with the term &#8220;Plutonomy&#8221; in 2005 to describe a country that is defined by massive income and wealth inequality. According to their definition, the U.S. is a Plutonomy, along with the U.K., Canada and Australia.

In a series of research notes over the past year, Kapur and his team explained that Plutonomies have three basic characteristics.

1. They are all created by &#8220;disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants&#8230;the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.&#8221;

2. There is no &#8220;average&#8221; consumer in Plutonomies. There is only the rich &#8220;and everyone else.&#8221; The rich account for a disproportionate chunk of the economy, while the non-rich account for &#8220;surprisingly small bites of the national pie.&#8221; Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalization.

Kapur says that once we understand the Plutonomy, we can solve some of the recent mysteries of the American economy.

indeed!
 
I disagree, but at least you bring some debate skills.

Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.
 
I disagree, but at least you bring some debate skills.

Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Okay. If you are going to make this argument, you would have to have a list of the stockholders of Citibank, and their respective political affiliations. If the majority stockholder is on the right at 51%, and the minority 49% left, it's a wash politically.

We're a nation of power and money, and BOTH hands are dirty.

I'll just repeat my stance from the last Presidential election .... Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.
 
Does Prosperity cause high wages or do high wages cause Prosperity?

Think before answering because you can get this very wrong and fuck a country up like Hoover and FDR did
 
Does Prosperity cause high wages or do high wages cause Prosperity?

Think before answering because you can get this very wrong and fuck a country up like Hoover and FDR did

You're deflecting. That's not what he addressed. DO the banks own our asses? Yes.

Try going big picture.

Who owns the banks?
 
I disagree, but at least you bring some debate skills.

Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Okay. If you are going to make this argument, you would have to have a list of the stockholders of Citibank, and their respective political affiliations. If the majority stockholder is on the right at 51%, and the minority 49% left, it's a wash politically.

We're a nation of power and money, and BOTH hands are dirty.

I'll just repeat my stance from the last Presidential election .... Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

I don't think that the ruling elite are divided along the same political spectrum that we are, Gunny. Soros, Gates, Buffet all contribute to dems or more often both parties. Goldman Sachs was Obama's leading private campaign supporter.

I believe that the elite and the rest of us are increasingly divided politically according to our wealth, and the two parties both deliver what they, the elite, want.

Since 2008 evidence of that is everywhere.

Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

It seems to be true, but Obama isn't the only dem. And if the repubs took the senate and the WH I expect they would just extend the losing streak of the last two presidents.
 
Last edited:
Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Okay. If you are going to make this argument, you would have to have a list of the stockholders of Citibank, and their respective political affiliations. If the majority stockholder is on the right at 51%, and the minority 49% left, it's a wash politically.

We're a nation of power and money, and BOTH hands are dirty.

I'll just repeat my stance from the last Presidential election .... Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

I don't think that the ruling elite are divided along the same political spectrum that we are, Gunny. Soros, Gates, Buffet all contribute to dems or more often both parties. Goldman Sachs was Obama's leading private campaign supporter.

I believe that the elite and the rest of us are increasingly divided politically according to our wealth, and the two parties both deliver what they, the elite, want.

Since 2008 evidence of that is everywhere.

Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

It seems to be true, but Obama isn't the only dem.

Obama's a rock star. Just a face on the cover of a magazine. However, so was Bush. The face applied to an alleged belief.

I agree. This is, and always has been class warfare from day one. The wealthy snooker the poor into any and everything with contrived bullshit, to include fighting their dumbass wars for power and money for them.

If you're waiting for an intelligent response HERE, good luck.
 
Plutonomics: A Unified Theory of Wealth - S. E. Harrison - an Inventerprise® book - ePoet® LLC

Plutonomics
A Unified Theory of Wealth

by S. E. Harrison

plutcover-5.jpg

&#8220;I remain shocked and awed by the intellect.... extremely impressive.&#8221;

&#8220;I am trying to live [Plutonomics] every day. And it's really working.&#8221;

&#8220;LOVED it!!.... So much truth to [the] model and to the philosophy behind it.... This should be required reading for all college students! Can you get it on the required reading list for all incoming [students]?"

&#8220;[The] book is killer. Each page reads as if it were a fine wine.&#8221;

"I had no idea that one could write about wealth in a poetic style. But [the author] did..... it struck me that every single word... is essential for the meaning the book is conveying just like every word in a poem has an important function in it."

I thought when I coined the title of the thread I had created a new buzzword, boy was I behind the curve!
 
Plutonomics: A Unified Theory of Wealth - S. E. Harrison - an Inventerprise® book - ePoet® LLC

Plutonomics
A Unified Theory of Wealth

by S. E. Harrison

plutcover-5.jpg

“I remain shocked and awed by the intellect.... extremely impressive.”

“I am trying to live [Plutonomics] every day. And it's really working.”

“LOVED it!!.... So much truth to [the] model and to the philosophy behind it.... This should be required reading for all college students! Can you get it on the required reading list for all incoming [students]?"

“[The] book is killer. Each page reads as if it were a fine wine.”

"I had no idea that one could write about wealth in a poetic style. But [the author] did..... it struck me that every single word... is essential for the meaning the book is conveying just like every word in a poem has an important function in it."

I thought when I coined the title of the thread I had created a new buzzword, boy was I behind the curve!

Dumb yourself down to communicate. A LOT.:lol:
 
I disagree, but at least you bring some debate skills.

Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Okay. If you are going to make this argument, you would have to have a list of the stockholders of Citibank, and their respective political affiliations. If the majority stockholder is on the right at 51%, and the minority 49% left, it's a wash politically.

We're a nation of power and money, and BOTH hands are dirty.

I'll just repeat my stance from the last Presidential election .... Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

Most people with an IQ over room temperature agree with you on that. The really sad part is that, instead of coming together to solve that situation, we bicker about shit. Which is exactly what both sides want, so that they can continue to rob us all.
 
Does Prosperity cause high wages or do high wages cause Prosperity?

Think before answering because you can get this very wrong and fuck a country up like Hoover and FDR did

You're deflecting. That's not what he addressed. DO the banks own our asses? Yes.

Try going big picture.

Who owns the banks?

The government owns the banks today, the better question is "who owns the Federal Reserve"?

If I didn't have the experience of working for a man who started off borrowing $50K and working tirelessly to build his company so that he's now on Forbes 400 I might be only slightly more inclined to buy into these notions about "the rich"

The people who started Google and Facebook are all the "rich" today yet 15 years ago no one could pick them out of a police lineup.

Yes, rich people have influence and don't care about unemployment of $4/gallon gas. Big fucking surprise.

The best thing that could ever happen to this country would be ending personal income tax
 
Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Okay. If you are going to make this argument, you would have to have a list of the stockholders of Citibank, and their respective political affiliations. If the majority stockholder is on the right at 51%, and the minority 49% left, it's a wash politically.

We're a nation of power and money, and BOTH hands are dirty.

I'll just repeat my stance from the last Presidential election .... Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

Most people with an IQ over room temperature agree with you on that. The really sad part is that, instead of coming together to solve that situation, we bicker about shit. Which is exactly what both sides want, so that they can continue to rob us all.

Both sides want power and control and to hell with laws, the will of the people, and the Constitution.
 
I disagree, but at least you bring some debate skills.

Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Actually would it not be better to describe the USA as being controlled by a government that has progressively moved further from the constitution and values of our constitution.

Each successive generation of Politicians add rules, laws, mandates, bureaucracy.

I think its a bit misleading to state we are ruled by a minority of the rich.

We are ruled by the progressive agenda that has infected our Republic.

Yes the rich have a tremendous amount of power, but that is built over many years of a law here, a law there, until the whole government is one out of control mess.

This is not capitalism at work.
 
Does Prosperity cause high wages or do high wages cause Prosperity?

Think before answering because you can get this very wrong and fuck a country up like Hoover and FDR did

You're deflecting. That's not what he addressed. DO the banks own our asses? Yes.

Try going big picture.

Who owns the banks?

The government owns the banks today, the better question is "who owns the Federal Reserve"?

If I didn't have the experience of working for a man who started off borrowing $50K and working tirelessly to build his company so that he's now on Forbes 400 I might be only slightly more inclined to buy into these notions about "the rich"

The people who started Google and Facebook are all the "rich" today yet 15 years ago no one could pick them out of a police lineup.

Yes, rich people have influence and don't care about unemployment of $4/gallon gas. Big fucking surprise.

The best thing that could ever happen to this country would be ending personal income tax

Y'think?

How about reforming the government? How about checks and balances to taxes and/or welfare? Welfare has its place. There ARE people who NEED it.

Going to watch them starve in the street?

The problem is getting rid of the abusers who use the system to suck off our tax dollars.

I'm okay with taxation WITH representation. I'm not okay with taxation with representation by people who didn't even win but the elite put them in office anyway.

Accountability.
 
Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Okay. If you are going to make this argument, you would have to have a list of the stockholders of Citibank, and their respective political affiliations. If the majority stockholder is on the right at 51%, and the minority 49% left, it's a wash politically.

We're a nation of power and money, and BOTH hands are dirty.

I'll just repeat my stance from the last Presidential election .... Republican'ts doing nothing is better than Democraps doing something that screws everything up.

Sad but true.

Most people with an IQ over room temperature agree with you on that. The really sad part is that, instead of coming together to solve that situation, we bicker about shit. Which is exactly what both sides want, so that they can continue to rob us all.

The political parties do that intentionally. Yet, we, the people, don't get it. To many "we, the people" are lemmings and follow one side or the other.
 
I disagree, but at least you bring some debate skills.

Thanks, Gunny. I am just quoting Citibank and the WSJ and their own characterizations of a national economy that is increasingly driven by the slimmest minority of it's pop.

Actually would it not be better to describe the USA as being controlled by a government that has progressively moved further from the constitution and values of our constitution.

Each successive generation of Politicians add rules, laws, mandates, bureaucracy.

I think its a bit misleading to state we are ruled by a minority of the rich.

We are ruled by the progressive agenda that has infected our Republic.

Yes the rich have a tremendous amount of power, but that is built over many years of a law here, a law there, until the whole government is one out of control mess.

This is not capitalism at work.

Really ... you would, huh?

Which war have we NOT fought for the rich over power and money? Please start with the American Revolution where poor colonists fought for the right of wealthy colonists to not pay taxes to our King and proceed .....
 

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