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Sad News: America's Billionaires Facing Tough Times

Have billionaires, as some observers claim, now 'suffered' their way back to the rest of us? Nope.
 
 
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Forbes magazine, our globe's premier scorekeeper for the games rich people play, last week delivered its latest annual tally of the world's billion-dollar fortunes, the first since the world economy went into meltdown mode. The Forbes verdict: We're seeing some mighty bad times for billionaires.

"Like the rest of us," intones Forbes, "the richest people on the planet have endured a financial disaster."

That theme quickly bounced around the world. The global economic crisis, noted a Times of South Africa editorial, has "hit the super-rich in the bread basket."

"The very wealthiest men and women," echoed the Times of London, "are suffering too."

The evidence? Since last year, says Forbes, the world's billionaires have lost $2 trillion off their $4.4 trillion collective net worth. The total global billionaire population has shrunk 30 percent, down to a mere 793 deep-pocketed souls.

In at least one case, these numbers certainly have translated into real suffering. This past January, Germany's fifth-richest billionaire, Adolf Merckle, killed himself.The industrialist stepped in front of a commuter train shortly after losing $500 million in the German stock market.

But Merckle may have been the meltdown's only real billionaire casualty. The world's super rich have actually survived the first stage of the global economic crisis quite nicely. Even those former billionaires who now count their fortunes in mere hundreds of millions, like former Citigroup CEO Sandy Weill, remain comfortably insulated from any state remotely close to suffering.

Not too many current or former billionaires, as the Toronto Star's Andrew Chung suggested last week, need "give up the $6,000 Dorchester Suite in London, or the $5,000 nightclub outing at Famous in Moscow, or the $7,000 Kiton suit from Saks Fifth Avenue in New York."

Some 44 billionaires, Forbes notes, have actually grown their fortunes over the past year. Hedge fund manager John Paulson, for instance, doubled his personal fortune to $6 billion, mainly by cashing out on bets that the mortgage market would nosedive.

Big Pharma executive Patrick Soon-Shiong did almost as well. He added $2 billion to a fortune that started the year worth $3.5 billion. Soon-Shiong scored big on the sale of APP Pharmaceuticals, one of his drug companies, after a contamination scare in China left APP the only U.S. source of a widely used blood-thinner.

Most of the world's billionaires, to be sure, did lose money last year. Some 87 percent, says Forbes, "saw their personal balance sheets falter."

But those faltering balance sheets still packed considerable financial punch. In billionairedom, even losers smile. The colorful Donald Trump, for one. He has lost almost half his fortune since last year's Forbes billionaire tally. No matter.

"We're going up," says Trump. "We're buying things we couldn't have dreamed of buying two years ago. And we have a lot of cash."

Indeed, a fortune worth even a single billion amounts to a nearly unfathomable nest egg. An average person who makes $50,000 a year would have to work 20,000 years to accumulate a fortune worth a simple $1 billion. The world's 793 billionaires now hold fortunes that average $3 billion.

More of these billionaires live in the United States than anywhere else. Thanks to the still expanding economic crisis, notes Forbes, the United States "is regaining its dominance as a repository of wealth."

American billionaires currently hold 44 percent of today's global billionaire collective fortune. Of the world's 14 richest billionaires, seven hail from the United States. Amazingly, four come from a single American family. The four top heirs to the fortune of Sam Walton, the founder of Wal-Mart, now sport a combined $70.6 billion in net worth.

Numbers these large tend to numb. We need some perspective here. Try this: Over 19 million Americans work for state and local governments, mostly in education. The pension funds they depend on for their retirement security, the Federal Reserve reported last week, have lost $108.3 billion, 35 percent of their value, since the meltdown began.

Who bears the responsibility for this meltdown? Forbes editor-in-chief Steve Forbes seems to feel no one really bears any personal responsibility for our current economic carnage. He sees the meltdown as more or less a natural catastrophe.

"The global economy has been battered by a financial hurricane," says Forbes. "It's no surprise that billionaires are being battered along with everybody else."

But billionaires have not been battered like "everybody else." They and their fellow super rich, in their chase after more billions, have been the batterers. Their reckless behaviors, on Wall Street and in Corporate America's executive suites, have essentially hollowed out America's middle class.

These super rich, despite their losses over the last year, remain super rich. They can still afford any luxury. More dangerously, for the rest of us, these super rich can still afford to powerfully influence -- and distort -- the political decisions that determine who will pay and who will really suffer in the troubled days ahead.

Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.
 
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