8% Richer We’re Told: So Where Did it Go?

Quickly run off and take a look at your bank statement. The last time you checked it out, you probably made a mistake when looking at your personal wealth and general finances. It doesn’t feel like you’re richer, but that’s what we are being told today. If we repeat it long and hard enough, then we will believe it. Maybe! Hammer it home like subliminal programming, brainwashed. At least, according to the latest report published by Allianz (Global Wealth Report) we should be an average of 8% richer financially-speaking today all over the world. If only that were true for everyone. Nobody believes averages, do they?

Global Wealth

Naturally, what the report fails to mention is that the average figures are in no way representative of the global situation of individuals in different countries. Did your finances increase by 8% in 2012 in comparison with the previous year?

I have a sneaky intuitive feeling that it’s not possible to state that all of the 50 countries that were included in the survey have seen an increase of 8% across the board in their personal finances of their citizens. What is probably more than likely is that some executive fat cat sitting and purring away has been lapping more cream than the average Joe-the-plumber type. It’s more of a case of the first guy’s finances have increased by 80% and the second guy’s finances have decreased by a similar amount only inversely proportional.

However the money is dished out and whoever gets it there is an 8%-increase and it’s down to the stock market increasing in value last year and this year too according to the report.

Bank deposits as well as investments and pensions stand today at an estimated sum of $150 trillion in the world. Never have we had so much money according to the Global Wealth Report. It was an increase on the figure of 2011 by exactly 8.1%. Between 2001 and 2012 the growth rate of financial assets increased by an average of 4.6% per year. It would seem that it is not only the USA that has an increase but also Europe. But, weren’t they supposed to be debt-ridden and in a crisis up to their little necks trying to bail out the Greeks, the Spaniards, the Italians, the Portuguese and the Irish? The list seems never-ending but it’s the same old story.

The report published today by Allianz states: “Booming stock markets allowed North America, and even crisis-ridden western Europe, to achieve commendable growth in 2012, at 8.3 percent and 5.3 percent respectively”.

But, the fastest rate of growth in terms of assets and finances seems to have been in Asia, where the real figure for that region according to Allianz stands at 16%. So, if we are to actually believe the figures, then North America has a rate of growth of finances that is half of the Asian increase.

Stock Markets

  • The Dow Jones Industrial Average increased by 7.26% in 2012.
  • The S&P 500 soared by +13.41%.
  • The NASDAQ increased by a staggering 15.91%.
  • In Europe, the FTSEEurofirst 300 added on an extra 12%.
  • The Nikkei in Japan saw a 23%-increase happen.
  • The Hong Kong Hang Seng jumped by nearly 23% also.

There were 10.4% more investments for 2012 in securities than since the start of the financial crisis in 2008. However, that is hardly surprising given the loose monetary policies that have been practiced and implemented around the world from the Federal Reserve to the Bank of Japan.

Debt

Not only are we supposed to be richer, but we are supposed also to have less debt according to the report for 2012. The burden of global debt stood at 32.4 trillion, which is only an increase of 2.9% on the previous year. But, the global debt rate fell from 2009’s total percentage of 71.6% to 2012’s level of 65.9%.

It’s probably not surprising that debt grew by very little in 2012 around the world.

Firstly, the economy was suffering from the after-shocks of the financial crisis and secondly the banks weren’t lending to people as they used to do and they’re still not. Anybody would think it was their own money they were lending, but it’s the taxpayers. Do they actually know that? Lastly, people didn’t have either the money or the jobs to borrow from the banks anyhow.

  • Switzerland is the country that is the most in debt in the world with regard to per-capita debt.
  • Each Swiss citizen is in debt to the tune of an average of 76, 200 euros.
  • But, Switzerland is also the richest country in the world with regard to per-capita financial net assets with an average of 141, 890 euros per person at the end of 2012.
  • The Belgians are the second wealthiest nation in Europe with regard to financial assets and they have a total value per person that amounts to 73, 520 euros.
  • The difference between Switzerland and Belgium in terms of financial assets is valued at 68, 400 euros per capita.
  • So, clearly, the number one country in the list is way ahead of the second European country.
  • Switzerland is also ahead of the USA and Japan. So, does debt bring wealth or is it the other way round?
  • Probably no connection at all. Switzerland is just a safe haven for money-giants in the world of finance.
  • The Swiss franc became a very safe investment for the world when the financial crisis hit.
  • It has seen a 37%-increase against the euro since that time.

Previous reports published by Allianz on Global Wealth have shown that there was indeed a drop in overall wealth of people around the world until 2012. That trend has now changed according to the figures that they have published today. But Allianz does not take into consideration material assets (such as artwork or vehicles).

There are countries that have lower average net holdings in comparison with the pre-crisis period. The obvious examples of Greece show that there has been a reduction from 50% to just 28%. Spain too has seen a fall from 61% to just 44%.

Once all of the Quantitative Easing is taken away and the easy money becomes harder and tighter, there may well be a whole different kettle of fish that gets to see the light of day.

About The Author

tothetick

Professional team of writers/analysts analyzing the financial markets.

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