A stock market rebound helped the world’s ranks of millionaires climb 17 percent to 10 million, while their collective wealth surged 19 percent to US$39 trillion, nearly recouping losses from the financial crisis, according to the latest Merrill Lynch-Capgemini world wealth report.

Stock values rose by half, while hedge funds recovered most of their 2008 losses, in a year marked by government stimulus spending and central bank easing.

“We are already seeing distinct signs of recovery and, in some areas, a complete return to 2007 levels of wealth and growth,” Bank of America Corp wealth management chief Sallie Krawcheck said.

The fastest growth in wealth took place in India, China and Brazil, some of the hardest hit markets in 2008. Wealth in Latin America and the Asia-Pacific soared to record highs.

Asia’s millionaire ranks rose to 3 million, matching Europe for the first time, paced by a 4.5 percent economic expansion.

Asian millionaires’ combined wealth surged 31 percent to US$9.7 trillion, surpassing Europe’s US$9.5 trillion.

In North America, the ranks of the rich rose 17 percent and their wealth grew 18 percent to US$10.7 trillion.

The United States was home to the most millionaires in 2009 – 2.87 million – followed by Japan with 1.65 million, Germany with 861,000, and China with 477,000.

Switzerland had the highest concentration of millionaires: nearly 35 for every 1,000 adults.

Yet as portfolios bounced back, investors remained wary after a collapse that erased a decade of stock gains, fueled a contraction in the global economy and sent unemployment soaring.

The report, based on surveys with more than 1,100 wealthy investors with 23 firms, found that the rich were well served by holding a broad range of investments, including commodities and real estate.

“The wealthy allocated, as opposed to concentrated, their investments,” Merrill Lynch head of U.S. wealth management Lyle LaMothe said in an interview.

Millionaires poured more of their money into fixed-income investments seeking predictable returns and cash flow.

The challenge ahead for brokers is convincing clients to move off the sidelines and pursue riskier, more fruitful investments.

“There is still a hesitancy,” LaMothe said.

“Liquidity is incredibly important and people need cash flow to preserve their lifestyle – but they want to replace that cash flow in a way that does not increase their risk profile.”

The report found that investor confidence in advisers and regulators remains shaken.

The rich are actively managing their investments, seeking customized advice and demanding full disclosure about the securities they buy.

There were signs that investors were shaking off their concerns. Families that kept money closer to home during the crisis began shifting money to foreign markets, particularly the developing nations.

North American and European investors are expected to increase their exposure to Asian markets, which are projected to lead the world in economic expansion.

Europe’s wealthy are seen increasing their US and Canadian holdings.

More wealthy clients also are taking a harder look at large companies that pay healthy dividends, as an alternative to bonds and their razor-thin yields.

“Investors are open to areas they hadn’t thought about before as they try to preserve their ability to be philanthropic, to preserve their lifestyle,” LaMothe said.

“To me, the report underscored clients are involved and they’re not inclined to stay in 1 percent savings accounts.”d clients are involved and theyre not inclined to stay in 1 percent savings accounts.”

via Worlds rich got richer amid recession | Stuff.co.nz.

Yet we hear that the Overseas Investment Office is deliberating an application by New Zealand citizen May Wang to purchase 16 dairy farms, backed by Hong Kong listed company Natural Dairy (NZ ) Holdings.

In light of the free trade agreement with China it seems unlikely that applications for NZ citizens to purchase businesses with Chinese investment backing will diminish.

We need to contemplate who the 96% elimination of tarrifs will actually serve when 2019 rolls around, and in whose interests they have been established. We also need to ask what this means for tangata whenua, especially in light of the repeal of the Seabed and Foreshore legislation.

While the OIO seeks to nurture New Zealand’s image abroad, serious consideration needs to be given to who’s interests will best be served by such investment.

There are many measures of inequality. One easy measure to use is the difference in take home pay. Of course this does not take account of Working for Families, or the effect of property taxes.

But as you can see from the Table, the gap in take home pay between workers on $30,000, $40,000 and so on and someone on $120,000 will widen considerably in October. The gap between someone on $30,000 and $120,000 grows by $72.89 and even the gap between someone on $60,000 and $120,000 grows by $53.85.

If we look at some other examples apart from those in the Table, someone on $15 an hour and compare them with someone on $50 an hour or $104,000 a year, the gap in take home pay now is $916.08. In October the gap will be $56.69 higher at $972.77. And the increase in the gap in take home pay between someone on $200,000 and $30,000 grows by $150 a week ($149.81).

The Government will argue that property taxes will even up this inequality to an extent. While it may be true that those who own investment properties are likely to be on high incomes, the reverse is not true. There are plenty of high income earners that will not be affected by new property taxes and those who are affected have the option to move their investments elsewhere. And in any case we are yet to see what effect these taxes have whereas we know the impact of GST will be a higher cost of living and some will face higher rents and early childhood education costs contributing to a steep rise in inflation.

In fact, if we include the impact of GST the income gap widens even further. This graph shows the difference between someone on the minimum wage and those on twice, three times, four times and ten times the minimum wage. It also takes account of the GST increase. Look at the huge difference in benefit from the tax package.

- Thanks to Peter Conway and Bill Rosenberg -

Makes sense unless there are other questions beside growth rates and per capita income we might like to ask?

Bach, boat and BMW? Can anyone say out of touch?

Moreover, I would need some evidence that faster economic growth would result in a more equitable society rather than making the rich richer and poor more marginalised before I accept it as a Holy Grail.

The economy is a wholly owned subsidiary of the environment. The articles I heard and read today seemed to accept economic growth as a good in and of itself without talking about anything mediating it, or even talking about the goal of growth and whether that goal could be achieved another way.

I found the tone of these articles totally bizzar. There is so little talk of ‘enough’ or being ‘content’ nowadays. Surely the last thing we need is an attacks on some residual of ‘enough’ in the kiwi mentality and branding that as the thing holding us back.

1. We admit we are powerless over consumerism—that our lives have become unmanageable.
2. We believe that a Power greater than ourselves could restore us to sanity.
3. We make a decision to turn our will and our lives over to the care of God. (we do not assume we have already done this because we are in a church or faith community, but come to this conviction afresh, over this specific issue)
4. We will make a searching and fearless moral inventory of ourselves.
5. Admit to God, to ourselves, and to another human beings the exact nature of our addictions.
6. We are entirely ready to have God remove the hold this power has over us.
7. We humbly accept God’s grace in overcoming our shortcomings.
8. We will make a list of all persons we have harmed – such as sweatshop workers, slaves, and those marginalised by our buy-in to a system that absolves us from social responsibility by shifting responsibility onto a welfare state – and became willing to make amends to them all.
9. We will attempt to make direct amends to such people wherever possible.
10. We will continue to take personal inventory and when we are wrong promptly admit it.
11. We will seek through prayer and meditation to improve our conscious contact with God, praying for knowledge of God’s will for us and the power to carry that out.
12. Having had a spiritual awakening, we will try to carry this message to our communities, and to practice these principles in all our affairs.

As well as the obvious change from the original, all the ‘I” statements have been changed to ‘we’ statements recognising that the need for a community, group, or church to move together.

Adapted by Jolyon White – confessed recovering consumer, trying to stay on the wagon.

Every one of us is used to the idea of a budget. If you ignore your budget it does not mean you get away without one. It means the limitationsof the resources available will catch you by surprise and you budget will be imposed upon you rather than by your choice.

I don’t envy the job of making a budget for a nation. It is hard enough making a personal budget. And yet, it must be done. I expect it to be done. The larger the range of the budget the bigger the consequences for not doing one. If I do my personal budget poorly, I will be adversely affected. If the government doesn’t do a budget the nation will be adversely affected. Limited resources into the government purse are simply a fact of life. We don’t argue about it. It simply is. You don’t get skeptics saying that there is no limitation in the budget, spend as much as you can. No sane person ignores the budget.

The limitation is not an enemy, it simply is, we must work within it.

The earth is approximately 510 million square kilometers, about 71% of which is ocean. There is constant growth and decay and systems that purify and clean; it is not static. But there is still a limited amount of biomass that a particular size piece of land can produce and a limit to the resilience of any eco system. There is a finite amount of pollutants that the oceans can absorb before they are adversely affected. There are a specific number of fish in the sea. A cow takes a known amount of space. There is a limited number of cattle that could survive on all the availiable pasture land. Land for which there are competing uses. Yet there seems to be an inability or unwillingness to consider the possibility that we live with a limited system.

A global resource budget is required. A budget is not the enemy. It allows us to make choices to live within finite resources. Otherwise, limitations will be imposed upon us. Neglecting a personal budget is foolish; neglecting a national budget would be tragic; neglecting a global budget would be catastrophic, but we are doing exactly this. A global case of the tragety of the commons.

However, we are resourceful people. There are several approaches being advocated. One that is worth thinking through is the idea of placing global commons in trust. Here is one example; the Earth Atmospheric Trust.

The mainstream model of development, sometimes known as the “Washington Consensus,” is based on a number of assumptions about the way the world works, what the economy is, and what the economy is for (see the table on page 33). These assumptions emerged during a period—the early industrial revolution—when the world was still relatively empty of humans and their built infrastructure. Natural resources were abundant, social settlements were sparser, and inadequate access to infrastructure represented the main limit on improvements to human well-being. It made sense, at that time, not to worry too much about environmental and social “externalities.” They could be assumed to be relatively small and ultimately manageable.
It made sense to focus on the growth of the market economy, measured in terms of gross domestic product (GDP), as a primary means of improving human welfare. It made sense, in that context, to think of the economy as only marketed goods and services, and to think of the goal as increasing the amount of goods and services produced and consumed.

The world, however, has changed dramatically since that time. We now live in a world relatively full of humans and their built infrastructure. Since the end of World War II, the planet has experienced what some have called “the great acceleration” in the consumption of fossil fuels and the growth of market economies. The human footprint has grown so large that, in many cases, limits on the availability of natural resources now constrain real progress more than limits on capital infrastructure do.

In this new context, we first have to remember that the goal of an economy is to sustainably improve human well-being and quality of life. Material consumption and GDP are merely means to that end, not ends in themselves. We have to recognize, as both ancient wisdom and new psychological research tell us, that material consumption beyond real need can actually reduce well-being.

Such a reorientation leads to specific tasks. We have to identify what really does contribute to human well-being, and recognize and gauge the substantial contributions of natural and social capital, both of which are coming under increasing stress. We have to be able to distinguish between real poverty in terms of low quality of life, and merely low monetary income. Ultimately we have to create a new vision of what the economy is and what it is for, and a new model of development that acknowledges the new full-world context.

[Robert Costanza is an ecological economist at the University of Vermont. To read the rest of this article either click the previous link and see the range of publications, or click here.]

The New Zealand Center for Ecological Economics have been developing a Genuine Progress Indicator (GPI) for New Zealand That looks to take all of the externalities and costs into account. These include: health, overwork, air pollution, crime, and water quality.

For methodology and a full list of what is taken into account visit the website. New Zealand Center for Ecological Economics.

The GPI for New Zealand is nearly complete and due for release soon. (And not a moment to soon. The National Government has just cut funding to cycling and walking in favour of building more roads, presumably to get the economy moving.)

There are a number of countries that have a GPI indicator already complete. The results are interesting.

In each case at a certain point the GPI and GDP diverge. After that point a pursuit of GDP would seem to be a complete waste of time. An efficient economy that ‘manages the household’ well would be a better pursuit.

Is a focus change to GDI as an economic indicator as well as policy driver sufficient? If the mandate of the church is to become involved in the transformation of all society as part of a proclamation of good news, is pressing for the abandonment of a conscienceless GDP in favour of GDI a helpful direction? Does this have the ability to help the most marginalised and poorest in our society where a pursuit of unlimited growth doesn’t?

So what are our options in terms of economic transformation? Not being an economist I feel overwhelmed. I lap up the complaints against the un-level playing field of the IMF and World Bank structural adjustment regime, and see the flaws around power in the putative free market approach of the WTO, but don’t see how the entire economic system could be transformed or redeemed. Those in the greatest position to transform the system are those most advantaged by maintaining it. Even well thought out and engaging books like ‘Being Consumed’ by William Cavanagh – a fantastic theologian who is also an economist of some standing – doesn’t seem to get much beyond suggesting fair-trade tea instead of normal.

For a Christian response I can see two directions to explore. At one end of a spectrum is the idea that the church is called to be a gathered body of believers who live in such away among themselves that they bare witness to the present reality of our future hope – life characterized by the kingdom of God. A counter-cultural community living ‘now’ in light of what is ‘not yet.’ In this case local currency alternatives within church communities might be the best approach. Time-banks and or green-dollar systems would form the heart of our economic engagement, creating the space where it becomes possible to simplify, become less busy in isolated work places, and step out of consumerism. The church community holds out a new hope, people are drawn to participate in this kingdom living. For want of a label this might be called an Anabaptist approach. The danger is that we become so separated that we cease to be a witnessing community and become a reclusive community that doesn’t engage with the suffering around us.

At the other end of the spectrum we work to transform all of society, to make the current system more in keeping with the ideals of the kingdom of God. Perhaps characterized as a Reformers approach. In this case we may need to be involved in an entire remake of the current economic system globally that may have created unsurpassed wealth, but without conscience has also created unsurpassed environmental destruction and global wealth disparity. The danger of this approach is that we become so involved and complicit in the system that there is no distinctive in the believing community; we look no different than the culture we are immersed in.
Somewhere along the spectrum may be response that is both pragmatic and faithful. Any assistance would be appreciated.