Friday, December 14, 2018

Populism, Explained

Yellow Vests are storming the Bastille, Trump is playing to the discontent of the working poor, ditto the Brexiteers, Germans are voting down mainstream parties in record numbers, stocks around the globe are tumbling, ditto commodities.

IMHO they are all connected and explained by the chart below from a World Economic Forum publication.   (

The chart is from an Oxfam report on global inequality:  According to the report, 62 billionaires own the same amount of wealth as 3.5 billion people who make up the poorest half of the world’s population. In a dramatic widening of inequality, this number has fallen from 388 in 2010, and is set to become just a handful of super rich by 2020.

Apart from ethical, societal, etc concerns there is a “technical” story here, one that concerns stocks: the market has become very narrow, fewer people own a larger proportion of shares.  This means that volatility goes up and, inevitably, downturns can become crashes as the number of potential buyers is now smaller. Looking at it another way, the ultra wealthy have painted themselves into a corner.

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