In today's time of gloom and doom and general economic despondency, all the media seems to be interested in is just how bad things are in the US of A and how bad things are going to get.
Everywhere in the US people are being told that the dollar is weak, people haven't saved enough for their pensions, the price of oil is going to go sky high and as if that weren't enough, in addition the housing market is still flat. In fact, there seems little respite from all the weeping and wailing about the state of the economy and what the US should do to fight back and start to see its dollar regaining at least a little strength.
After a while, this can get really depressing and it's very hard to see the wood for the trees. There is almost a sense that things really are going to get bad and not just the US, but the whole world, may even see rocketing levels of inflation.
So are there any good aspects to the US economy currently? Or is it all just an unfolding drama, which could well turn into a tragedy?
Well, the dollar may be weak, the euro may be strong, life may be a bit difficult for some people and perhaps everyone will feel affected in some way, to some degree or another by the credit crunch.
But even though nations are switching their allegiances and are now stocking euros instead of US dollars as their main form of reserves and even though the euro may (or on the other hand) may not usurp the dollar as being the most sought after currency on the planet, the US has a secret weapon: billionaires!
That's right, if you are a billionaire, then America is the place that you want to go to and live in.
After all the effort of making all that money, accruing vast portfolios, dealing, selling, buying and trading, do billionaires flee to other countries carrying their soon to be worthless dollars with them? No, they stay in the US and more importantly perhaps, their wealth stays with them to a large extent.
Billionaire statistics
Statistically within the world, there is a grand total of 1,062 billionaires. (These are billionaires in US Dollars, which incidentally, is still the preferred standard against which billionaires are assessed. Do people talk of ‘Euro Millionaires’? No, the standard is US $)
Of these 1,125 billionaires, 469 of them are actually American citizens. So the USA is home to almost half of the world’s billionaires.
Recently there has been much talk about Russian billionaires as if they had taken over from American billionaires and people seemed all too quick to think that billionaires were now an established part of the former Soviet Union, with very few left in the US.
However, recent research (2008) undertaken by the magazine Forbes, has indicated that billionaires are by no means few and far between in the United States, indeed it is the preferred location for most billionaires.
Why the USA?
The United States has long since projected itself as the land of opportunity and indeed, with the number of billionaires in the US, this would seem to be quite an accurate description.
The US can offer excellent opportunities for trading, networking and perhaps most importantly of all, for some frontier markets where the real money can be made and fortunes lost or won. The tax system in the US is also considered reasonably fair and there are lots of creative energy and vitality that can be tapped into, very easily.
In other words, the US offers the perfect conditions in which billions can be created and indeed, are created.
It is also interesting to consider that this research was undertaken in 2008 and if the American economy were really in such poor way and if the dollar were about to be devalued and the whole bottom was going to drop out of the US economy, then surely billionaires would be the first to actually leave the sinking ship.
If you have more than $1 billion, then any significant and prolonged dip in the dollar will affect your fortunes. Given that billionaire's have quite an extensive range of housing options available to them, in other words they can live anywhere and possibly have better tax conditions in other countries, almost 50 % are choosing to live in the US.
Ironically, on a pro rata basis, billionaires are quite dramatically affected when the dollar is exceptionally weak, because it affects them a billion times more than someone who only has a dollar. Admittedly, they can buy an awful lot more even with the 1 billion devalued dollars than the person with only $1. Yet billionaires have generally worked incredibly hard to make their money and usually they strongly resist any attempts to take it away from them.
This means, that historically, when the going gets tough the tough get going and that usually means that billionaires leave the country that is experiencing difficulties and make sure that they convert all their money into one currency that is going to give the optimum yields.
So perhaps the fact that so many billionaires are choosing to stick with the US, should act make the rest of the world realise that things may not be as bad as they may seem.
Where do other billionaires live?
Europe
as a whole boasts 298 billionaires, so it may have the euro, but it
certainly doesn't have as many billionaires as the US.
Well despite
all the talk of Russian billionaires, they are actually a much more
endangered species, than the media may have thought. There are
currently only 87 Russian billionaires. When you consider the 469
Americans billionaires, this figure starts to look quite low.
There are a total of 53 Indian billionaires on the rich list, which is slightly fewer than 2007 estimates, but still shows just how far the Indian economy has come over the last few years. Around 10 years ago, there was not one Indian on the list of billionaires.
Although economists are always saying that China is a much stronger economy than India, there are only 42 Chinese billionaires. This is somewhat surprising, given the fact that the Chinese economy is growing more quickly than the Indian economy and it is also a more diverse economy, with India being more service oriented.
Historically, the United Kingdom has not been a good place for billionaires to live. This is mainly due to its tax regime, which can be quite harsh, particularly for billionaires. However, in 2008 47 billionaires are living in the UK.
Compared
to both India and China, the United Kingdom has far fewer billionaires,
but on the other hand it has a drastically lower population with only
around 60 million people, whereas China has 1.3 billion people.
India has a population somewhere in the region of 1.13 billion, which
again is significantly higher than the UK’s paltry 60 million .
Statistically, the fact that India has 53 billionaires and China has 42 billionaires and both these countries have a population in excess of a billion, yet the US only has a population of just over 300 million, less than one third the population of both China and India, does give some indication, that the U S is still a strong economic power.
Hong Kong, that well known bastion of capitalism has at least 40 billionaires, yet it only has a population of around 7 million, sometimes slightly more, sometimes less. So, statistically Hong Kong is quite well off in terms of billionaires, particularly when it you compare it to China, with its huge population but only two more billionaires.
Other countries, tend to have fewer billionaires, but interestingly Brazil which has often thought of as quite a developing country has 16 billionaires whereas Australia can only boast 14. Canada on the other hand has 23.
And Venezuela, which is often thought of as a combination of a developing country and one that has oil, only has two billionaires.
Some billionaires live in countries where they are the only billionaire to live there. A total of 8 people live in a country where they are the only billionaire.
Huang Maoru lives in Belize, where he is the only billionaire. Lily Safra lives in Monaco, where surprisingly, she is the only billionaire. Monaco has long enjoyed a reputation for being the playground for the very rich and famous. However, Monaco cannot boast more than one billionaire, although it does have its fair share of millionaires, who like to take advantage of the tax system.
Nigeria, which was once one and of the poorest countries in Africa has a billionaire called Aliko Dangote, who isn't just a billionaire, he is actually worth $3.3 billion. He has made his money from flour, sugar and cement as well as some manufacturing. He was also lucky enough to inherit some money.
Oman has its first billionaire who is
called PNC Menon and who has a fortune in the region of $1.3 billion,
which he made from real estate.
Oman has plenty of millionaires due to the revenue it is able to get from oil, but Menon is its first billionaire.
Argentina is only able to boast one billionaire, who is worth in the region of $2.1 billion, which is derived from gasoline and oil.
Denmark has its very own billionaire in the form of Kjeld Kirk Kristiansen, who is worth a staggering $6.5 billion. So in some ways, he is almost like 6.5 billionaires rolled into one. He inherited a great deal of his money and then made more through manufacturing.
The Czech Republic has a billionaire and no small fish at that. He is Petr Kellner and he is worth a mind blowing $9.3 billion. He is 43 and made his money from insurance.
Iceland has its billionaire, who is Bjorgolfur Gudmundsson, who is worth some $1.1 billion.
Billionaire's playground: The USA
So, if you want to meet a real life billionaire, then you should head off to either the US or Hong Kong. Whilst US has a great deal more billionaires than Hong Kong, due to the fact that Hong Kong only has around about 7 million residents, statistically it should be easier to find a billionaire, than it is in a country that has a population of around 300 million.
However, it is excellent news for the United States that so many of its billionaires choose to stay, even though there may be some difficult times ahead. Hopefully, that is enough to make the most jaded financial predictions seem a bit too despondent and hopefully make most US citizens just smile a little, after all the despondency of late.
The rich list overall
The rich list really has changed over the years. Millionaires and billionaires used to be few and far between and those who were either a millionaire or billionaire, were usually located in the United States, or in one of the oil-producing countries of the Middle East
Historically, it would have been unthinkable for people from India and China to be billionaires. But now even Nigeria and Argentina have their billionaires. This may well mean that the dynamics of wealth are actually changing and wealth is being spread around the globe, in a way that was inconceivable 10 or 15 years ago.
Who knows what the
rich list will look like in 10 years' time. It is likely that there
will be an increasing number of people from both China and India on
this list. There may also be more people from the African continent as
that economy begins to change and develop. However, the pessimistic
forecast (there is usually one), is that the rich list will be severely
affected by the effects of climate change as well as the long term
implications of the price of oil being so high. But given that many on
the rich list are those who actually control oil, there may simply be a
switching of places, with more people on the rich list from oil
producing companies near the top of the list and others moving down a
place or two.
The fact that the US has seen a difficult few years
has not actually stopped two US citizens being two out of the three top
billionaires in the world. So perhaps things are not all that bad in
the US.
Whilst the rich list is not a true test of how an economy is doing, it can act as some kind of litmus test, to see whether or not those at the top of the economy have any faith in it. To put it simply, if they don't have faith in the economy, they will move. So it is interesting that 469 American billionaires have nailed their flags to the American post and are sticking with the US.
Warren Buffett is now the richest man in the world he has a total of $62 billion and he lives in the US. The third richest man is now Bill Gates, who is worth something in the region of $58 billion. Interestingly the second richest man in the world is the billionaire Carlos Slim Helu (and his family) who is worth $60 billion and he is based in Mexico.
So, the fact that the world's two richest men are citizens of the United States and continue to live in the United States is a good yardstick of at least some faith in the economy.
In addition, it is no bad thing for any markets or economy to have some billionaires around, because they certainly do generate wealth and as the old saying goes ‘Money begets money’. So, if you are in a country that has some billionaires, then they will certainly generate some wealth for that local economy. The fact that America actually has 469 billionaires should help the US economy, even if that is only in a small way.
However, the psychological impact of billionaires choosing to stay cannot be under estimated and the US government should really be quite thankful to their billionaires for sticking with them.
In addition to the billionaires, the US has also got its fair share of millionaires, with estimates ranging from around 3 million to 8 million millionaires in the United States alone. These figures differ significantly, due to the fact that sometimes it is difficult to assess true estate of a person, since some of their capital may be tied up in real estate, or in different offshore investments and these can be difficult to gauge accurately.
The majority of millionaires, billionaires and people who are just quite wealthy all appear to be resolutely staying where they are and not leaving the country, which all helps to make the rest of the US feel just that little bit more confident about the future and it is about time that some confidence was restored!