Category Archives: middle class

9/9/18: Populism, Middle Class and Asset Bubbles

The range of total returns (unadjusted for differential FX rates) for some key assets categories since 2009 via Goldman Sachs Research:

The above highlights the pivot toward financial assets inflation under the tidal wave of Quantitative Easing programmes by the major Central Banks. The financial sector repression is taking the bite out of the consumer / household finances through widening profit margins, reflective of the economy's move toward higher financial intensity of output. Put differently, the CPI gap to corporate costs inflation is widening, and with it, the asset price inflation is drifting toward financial assets:

This is the 'beggar-thy-household' economy, folks. Not surprisingly, while the proportion of total population classifiable as middle-class might be stabilising (after a massive decline from the 1970s and 1980s levels):

 Incomes of the middle class are stagnant (and for lower earners, falling):

And post-QE squeeze (higher interest rates and higher cost of credit intermediation) is coming for the already stretched households. Any wonder that political populism/opportunism is also on the rise?

18/1/16: Forget Conventional Geopolitics, Demographics is the New Global Conflict Ground Zero

While analysts are worried about geopolitical tensions relating to *hot*, *cold* and *frozen* conflicts of traditional nature, the real Global Conflict is unfolding, slowly-paced, in the realm of demographics.

Here are two key themes underlying it:

Firstly, the ongoing widening of the generational gap, highlighted in my recent talks including here: The Generational gap that can be described as the difference between economic power and aspirations of two distinct generations: the post-millenials and baby-boomers.

To see this we can take two examples of views from the baby-boom generation:

The second manifestation is that of the disappearing middle classes, best highlighted by the following series of links covering Pew Research analysis of the U.S. data:

All of the above concluding with the twin trend of vanishing core generational driver for the global economy:

If you still think conventional weapons and geopolitical power plays are the biggest disruptors of status quo ante, think again.