The financial meltdown of 2008 has damaged more than the egos of the global elite. Their wealth, too, has taken a beating.
The latest World Wealth Report by Merrill Lynch and Capgemini released on Thursday estimates the extent of the damage: a nearly $8 trillion (Rs388 trillion) drop in the wealth of those with investable surpluses of at least $1 million.
The Indian rich have not been spared either; the number of rich in India has reduced sharply, from 123,000 at the end of 2007 to 84,000 a year later.
Citigroup’s global strategist, Ajay Kapur, had in 2006 coined a term for an economy that derived strength from the assured consumption of the super rich: a plutonomy.
Lower tax rates and high asset prices had led to levels of wealth inequality not seen since perhaps the end of World War II. This resulting plutonomy ensured that consumption in countries such as the US was immune to normal fears such as high oil prices or huge trade deficits.
Plutonomies are now clearly in trouble after the pricking of the asset bubble.