crackerjack
Well-known member
The hedge funds you manage do well that year.
A few things ...
- Thread starter vimothy
- Start date
The hedge funds you manage do well that year.
vimothy
yurp
Er, that's my fault -- I kind of threaded together a few different arguments in that post, probably not very coherently, in a vain attempt to mush together the reading that I've been doing whilst pretending to work.
This bit, e.g., was in response to someone else making similar claims using similar data-sets:
The bottom quintile of families today includes a bunch of people who weren't there in 1980. Some of the families are recent immigrants to the United States seeking opportunity. Some of the families are young and just starting out. Some are the result of a divorce that has dumped one or both partners into poverty and it will take time for them to recover.
vimothy
yurp
Well, yeah, that's kind of what I was thinking -- the top 1% probably does change about a bit.
IdleRich
IdleRich
Fair enough.
It would be interesting to know how much the top 1% changes and, perhaps more importantly, to know how many of those that enter it came from the top 1.1% (ie hedge fund managers or equivalent whose fund did better than the guy above them in the list) - and how many came from the bottom x%.
If you find out tell me yeah?
vimothy
yurp
Yes, absolutely. There's all sorts of interesting problems with this sort of stuff...
I mean, is the top 1% even a salaried position? I'm sure that hedge fund managers who do well get hefty bonuses and fat wads of options and what have you, but is that enough? And how big a number is this 1% anyway?
vimothy
yurp
Barnett weighs in:
A pretty good piece that poses a fabulous question and then gives you a "Casino"-like tale of money movement. Like Scorsese's movie, then, the article intrigues and informs but is somewhat unsatisfying: the "what do we/they owe" question is never really addressed.
What Fallows doesn't address in China's vast surplus/savings is the huge and very real current sovereign debts and future mandates that are hidden in this development scheme: overseas resource dependencies demanding investment stakes, future aging costs, current and future enviro costs, future requirements to build out (and up) the poor interior, and so on.
Those are real sovereign liabilities because the people will expect some/much government help in these matters over time to ensure continued development and sustained movement up the product chain (gotta get as rich as possible before getting old).
Having said all that, Fallows' analysis of the government's logic is dead on. I suspect that, with all his time spent in China, we'll see a book that does a big turn in explaining China to America. That will be a huge journalistic endeavor, and most welcome from someone with his considerable narrative talents.
As for the larger strategic question, we owe China a quiet international security order within which to develop, and sufficient partnership so as to obviate too much defense spending on their part. Eventually, Deng's "grand compromise" of 1992 (PLA supports him on market acceleration in return for money and cover to modernize) must be tempered so that China doesn't field a military for a war that should never happen and which it could never win. It needs to field a SysAdmin-heavy force that partners with us in mutual dependence: we can't rule the peace with our Leviathan-heavy force, but they can't rule war with their Leviathan-lite force either, so we must cooperate in extending and protecting globalization to our mutual advantage..
We owe China this strategic understanding before the 5th/6th generations of Chinese leadership hit some of the fish-or-cut-bait moments that must inevitably arise for them in coming years.
Fallows hints at those underlying tensions at the end of the piece.
What Fallows doesn't address in China's vast surplus/savings is the huge and very real current sovereign debts and future mandates that are hidden in this development scheme: overseas resource dependencies demanding investment stakes, future aging costs, current and future enviro costs, future requirements to build out (and up) the poor interior, and so on.
Those are real sovereign liabilities because the people will expect some/much government help in these matters over time to ensure continued development and sustained movement up the product chain (gotta get as rich as possible before getting old).
Having said all that, Fallows' analysis of the government's logic is dead on. I suspect that, with all his time spent in China, we'll see a book that does a big turn in explaining China to America. That will be a huge journalistic endeavor, and most welcome from someone with his considerable narrative talents.
As for the larger strategic question, we owe China a quiet international security order within which to develop, and sufficient partnership so as to obviate too much defense spending on their part. Eventually, Deng's "grand compromise" of 1992 (PLA supports him on market acceleration in return for money and cover to modernize) must be tempered so that China doesn't field a military for a war that should never happen and which it could never win. It needs to field a SysAdmin-heavy force that partners with us in mutual dependence: we can't rule the peace with our Leviathan-heavy force, but they can't rule war with their Leviathan-lite force either, so we must cooperate in extending and protecting globalization to our mutual advantage..
We owe China this strategic understanding before the 5th/6th generations of Chinese leadership hit some of the fish-or-cut-bait moments that must inevitably arise for them in coming years.
Fallows hints at those underlying tensions at the end of the piece.
N
nomadologist
Guest
Honestly I'd be surprised if hedge fund managers even make it into the U.S.'s top 1%. It's a pretty elite club. At this point, I wouldn't be surprised if it's mostly comprised of billionaires and near-billionaires only. Very few hudge fund managers make that kind of money, though of course they make plenty. The top 1% is made up more of the types who spent 30 years managing hedge funds (or whatever the best portfolio of the day was back when) then made CFO somewhere, then co-owned a trust or i-firm, then started a foundation in their son's name, etc.
For these reasons I would think (though I could be wrong) that the top 1% stayed pretty much the same from 1930 until around 20 or 30 years ago.
For these reasons I would think (though I could be wrong) that the top 1% stayed pretty much the same from 1930 until around 20 or 30 years ago.
IdleRich
IdleRich
Well, we should be able to do some working out on this, even if it's just doing a back of the envelope calculation using some data from wikipedia. I mean, US has population about 3 hundred million, therefore there are three million people in the top 1% - which means that it's not that small a club. According to wikipedia there are 432 (dollar) billionaires in the US, in other words, if you are a billionaire you are in the top 0.0001%. Wikipedia says that there are 3,200,000 millionaires in the US which looks like about 1% to me although wik lists it as 0.62% (in direct contradiction of its previous statistic). Either way, unless I've done something stupid, it looks like being a millionaire means that you are in the top 1%.
Did I do anything stupid?
Did I do anything stupid?
vimothy
yurp
I thought the data refered to thte top 1% of wage earners? Probably I'm just splitting hairs.
That comment was aimed at nomadologist.
vimothy
yurp
Robb on Fallows:
Zenpundit:
Fallows runs through the details of the "financial balance of terror" between the US and China and concludes that it won't last long. However, of the reasons he listed for a collapse of the balance, he didn't include the most likely: that China will need the money to shore up its domestic economy as the US heads into a lengthy and severe recession.
Remember, China hasn't endured anything other than growth pain for over a decade. Further, the average Chinese citizens hasn't reaped much from that boom. They don't have the financial reserves to weather a crisis (and many of those that do will lose their shirts when China's market bubble tanks). So where will this cash go over the next two years? Not into Blackstones or US Treasuries. Instead, it will be invested domestically. Into jobs and projects to shore up the little bit of legitimacy the Chinese government still has (we see a similar pattern with many of the globe's marginally legitimate governments, from Saudi Arabia to Russia).
Frankly, I'm not sure that $1.4 trillion (the normative value of which is evaporating with each plunge in the dollar) will be enough to prevent China from disintegrating if this crisis becomes a panic.
Remember, China hasn't endured anything other than growth pain for over a decade. Further, the average Chinese citizens hasn't reaped much from that boom. They don't have the financial reserves to weather a crisis (and many of those that do will lose their shirts when China's market bubble tanks). So where will this cash go over the next two years? Not into Blackstones or US Treasuries. Instead, it will be invested domestically. Into jobs and projects to shore up the little bit of legitimacy the Chinese government still has (we see a similar pattern with many of the globe's marginally legitimate governments, from Saudi Arabia to Russia).
Frankly, I'm not sure that $1.4 trillion (the normative value of which is evaporating with each plunge in the dollar) will be enough to prevent China from disintegrating if this crisis becomes a panic.
Zenpundit:
China holds enormous reserves in dollars because their financial strategy - parking surplus cash in Treasury securities - also represents an internal political strategy of deferring acrimonious, major, spending and investment choices that might precipitate division among the elite. China’s leaders are acutely aware of their nation’s deficiencies and historical tendency toward centrifugal, regional, disintegration and keeping the country intact and the state in charge is right up there in terms of priority with sustaining a fantastic rate of GDP growth. The dollar surplus represents an agreeable, strategic, ”rainy day fund” consensus choice of the elite and significant changes here will only be in response to pressures or needs that the elite of the CCP can get behind as a whole. Likely, cautious changes but possibly also too little too late.
IdleRich
IdleRich
Well, it wouldn't be splitting hairs because the crude analysis I just did seemed to suggest that the richest 1% of people are those with a million or more which meant that people guessing that you had to be a billionaire or that it wasn't possible to be there with a salaried position were way off track. Presumably the top 1% of earners would be significantly richer than the top 1% of people and this might no longer be the case.
However the data did refer to the top 1% of earners so you were wrong.
vimothy
yurp
Now I'm really confused.
If the data refers to the top 1% of earners, isn't that what we have been arguing about?
IdleRich
IdleRich
Whoops yeah, I meant people not earners. That didn't help clear anything up, sorry, mea culpa etc.
What I meant to say is, it is important to compare like with like but I think we were so that's ok. The statistics about the rich staying rich in fact appears to apply to people who possess more than a million dollars (excluding the value of their house).
What I meant to say is, it is important to compare like with like but I think we were so that's ok. The statistics about the rich staying rich in fact appears to apply to people who possess more than a million dollars (excluding the value of their house).
vimothy
yurp
Did you get that from the Piketty and Saez paper? They say, "we have constructed annual 1927 to 2002 series of top shares of salaries for the top fractiles of the wage income distribution, based on tax returns tabulations by size of salaries compiled by the IRS since 1927", and on that basis I assumed that they were refering to the top 1% of earners.
IdleRich
IdleRich
I see what you mean.
I took it from the Krugman thing you also posted
It looks as though there were "Chinese whispers" between those two things - or else Krugman is using the terms "richest" and "highest earning" interchangeably (and incorrectly so in my opinion).
On page 63 of the Piketty thing they list some relevant data. It says that to be in the top 1% of earners (if I'm reading it correctly) you need to be earning more than a threshold of just under $280k a year. I guess that that is what they are working with, and the answer to your question as to what you need to do to break the top 1% - a salary that is well within reach of the average trader, fund-manager or even analyst I would imagine.
vimothy
yurp
Cheers for that.
Do they say how large in numbers that 1% is at any given point of the sample?
IdleRich
IdleRich
Oh yeah, I forgot to say that that was for the year 2000.
I guess that the other 170 odd million in the overall population are unemployed, illegal or under or over age.
You may want to check that I'm reading the figures correctly, like I said it's page 63.
Presuming that what they mean by "taxation units" is the number of people, they cite a full population of 133,589,000 and the number of people in the top 1% as 1,335,890 (of course).
I guess that the other 170 odd million in the overall population are unemployed, illegal or under or over age.
You may want to check that I'm reading the figures correctly, like I said it's page 63.
vimothy
yurp
Cheers -- I'm going to post a load more of these studies as soon as I get the chance.