Now that a new report by Oxfam International duly informed us that the 85 unnamed richest people have as much wealth as the poorest 3.5 billion people combined, we want to know where they’re staying overnight when they come into town for dinner. We already know where the poorest 3.5 billion are staying: in shacks and hovels and moldy apartment blocks, the lucky ones. The rest are on the street. And they’re not likely to go to New York for dinner.
The wealthiest 1% had a net worth of $110 trillion, or 46% of the world’s total wealth, according to the report. The bottom 50% of all humanity – the poorest 3.5 billion people – carves up amongst itself $1.7 trillion, or 0.7% of the world’s total wealth, same as the wealthiest 85 individuals.
That gap between the very few immensely rich and the impoverished masses has grown – particularly since central banks have embarked on their money printing and zero-interest-rate-policy orgies, lovingly dubbed QE and ZIRP. The Fed had made its philosophy clear from get-go. It would print money and buy assets to drive up asset prices, which would bail out the banks and deleverage corporations by reflating the decomposing assets on their balance sheets. The Fed would also lend them short-term money at near zero cost to bail them out rather than let their teetering empires collapse. Once that job was accomplished, the Fed continued with its QE and ZIRP mania to create that “wealth effect,” as Chairman Bernanke pointed out repeatedly, which would somehow throw off some crumbs for the hoi polloi.
Not a lot of crumbs were thrown their way, but those on the receiving end of QE hit pay dirt: the richest 1% in the US received 95% of the huge wealth the Fed created out of nothing since 2009, according to Oxfam, while the bottom 90% of Americans have become poorer.
So Oxfam found in surveys it conducted in Brazil, India, South Africa, Spain, the UK, and the US that a majority of the people believed that laws are skewed in favor of the rich. In Spain, whose government has been steeped in corruption accusations while enjoying near total immunity, 80% thought so. In a poll of low-wage workers in the US, Oxfam found that 65% believed that Congress “passes laws that predominantly benefit the wealthy.”
The big question is not how these 85 people got their hands on this wealth while most other people became poorer, or what they did with it, and why the crumbs aren’t falling off the table, but where they’re staying when they’re in town. Because certainly, after all the Fed has done for them, they’re not going to stoop low enough to get an executive king with free wireless and continental breakfast at the Hyatt.
Turns out, they have special places waiting for them where they can camp out for a night – at the mere cost of a new Ford Fusion.
Now regular wealthy folks when they come to New York might stay at the New York Palace, say in one of their Tower Corner Suites that start “from $1,995” per night, when I checked the website. But for these 85 richest people, there is a treat, something you can’t find – much less reserve – on the hotel’s website: the Jewel Suite by Martin Katz. The New York Times got to see it:
The three-story, 5,000-square-foot space — a sort of penthouse Versailles — itself resembles a jewel box, albeit one with its own private elevator and views of the Empire State and Chrysler Buildings.
It’s hard to imagine Louis XIV being left wanting. The floor in the entryway is glittering black marble arranged in a sunburst pattern, while a 20-foot crystal chandelier hangs from the ceiling. The living room sofa is a brilliant sapphire blue and a tufted ivory chaise has a pearlescent sheen. Two floors up, in a second living room next to a vast private terrace, the wet bar (one of two in the suite) and half-bath are swathed in a sparkling wall covering, and an angular lavender sofa calls to mind an amethyst crystal. Iridescent tiles lining the private rooftop hot tub give the impression of sinking into a giant opal.
And then there are the jewels themselves: More than a million dollars of the jewelry designer’s work is displayed in five museum-like cases in the entryway, and a boudoir area in the master suite has lighting and floor-to-ceiling mirrors designed specifically for jewelry showings….
You get the drift. $25,000 per night.
Other hotels in New York are also chasing after the richest 85 people. The Mandarin Oriental offers a 3,300-square-foot suite with “floor-to-ceiling windows and a dining room that seats 10” for $28,000 a night. The Loews Regency Hotel just reopened after having been closed for renovation, which included the creation of six unique suites (to be available by April, dizzying rates TBD).
The phenomenon is not limited to New York. The Ritz-Carlton in Dallas will finish a 5,135-square-foot “suite wing” in a few days, comprised of three adjoining suites and two rooms. “We found this need for this private area,” General Manager Roberto van Geenen told the Times. So when the folks with their entourage, their body guards, nannies, consorts, and what not show up, they can all stick together.
These special suites – at the cost of a new car per night – are also popping up in Las Vegas and Miami, such as the just opened 3,000-square-foot penthouse at the Hilton Bentley Miami/South Beach. Singapore, London, Paris, and some Middle Eastern cities started that trend. Because in the end, these 85 people and their entourages, along with the next few thousand richest people in line have got to have a place to stay when they blow into town for dinner.
And so we have finally discovered the long-illusory benefit of the Fed’s “wealth effect” for the US economy: the new wealth it effected allowed the very few recipients to splurge, which in turn encouraged these hotels to spend some money in redoing a suite or two and dolling them up with the finest imported furnishings.
By contrast, tech isn’t exactly booming, as we’ve seen from numerous corporate revenue and earnings debacles, collapsing sales of US products and services in China and Russia, massive layoffs…. But that hasn’t kept “valuations” of money-losing tech startups from being pushed into the stratosphere – for the benefit of the same elite club. Read…. How to Manipulate the Entire IPO Market With Just $250 Million