What they mean by wealth in this study is what people own, less what they owe - their debts. The assets include land, buildings, animals and financial assets.

Different assets

The analysis shows, as have many other less comprehensive studies, striking divergences in wealth between countries.

Wealth is heavily concentrated in North America, Europe and some countries in the Asia Pacific region, such as Japan and Australia.

These countries account for 90% of household wealth.

The study also finds that inequality is sharper in wealth than in annual income.

And it uncovers some striking differences in the types of assets that dominate in different countries.

In less developed nations, land and farm assets are more important, reflecting the greater importance of agriculture in those economies.

In addition, the report says the weighting is the result of "immature" financial institutions, which make it much harder for people to have savings accounts or shares.

In contrast, some citizens of the rich countries have more debt than assets - making them, the report says, among the poorest in the world in terms of household wealth.

However, they are presumably better off in terms of what they consume than many people in developing countries.

Comprehensive

The survey is based on data for the year 2000. The authors say a more recent year would have involved more gaps in the data. As it is, many figures - especially for developing countries - have had to be estimated.

Nonetheless, the authors say it is the most comprehensive study of personal wealth ever undertaken.

Why does it matter? Because wealth serves as insurance against times when income tends to fall, such as unemployment, sickness or old age.

It is also a source of finance for small businesses, a particularly important point since it is the countries with lower levels of personal wealth which also tend to have weaker financial systems without the funds, ability or inclination to lend to small firms.

The report is not about policy recommendations.

But one of the authors, Professor Anthony Shorrocks, says it does draw attention to the importance of enhancing banking systems in developing countries to help generate the funds for business investment.

The UK is also third in terms of per capita wealth. UK residents are found to have on average $127,000 (£64,000) each in assets, with Japanese and American citizens having, respectively, $181,000 and $144,000. All data relate to the year 2000.

The global study - from the World Institute for Development Economics Research of the United Nations - is the first to chart wealth distribution in every country as opposed to just income, for which more comprehensive date is available. It included all the most significant components of household wealth, including financial assets and debts, land, buildings and other tangible property. Together these total $125 trillion globally.

Anthony Shorrocks, director of the research institute at the United Nations University, in New York, led the study. He affirmed that the existence of a nest egg provided an insurance policy that helped people cope with unforeseen events such as ill health or a lost job. Capital allowed people to drag themselves out of poverty, he added. "In some ways, wealth is more important to people in poorer countries than in richer countries." It was more difficult in developing countries to set up a business because it was harder to borrow start-up funds, he said.

His team used detailed data from 38 countries, but had to rely on incomplete information from the rest.

The report found the richest 10% of adults accounted for 85% of the world total of global assets. Half the world's adult population, however, owned barely 1% of global wealth. Near the bottom of the list were India, with per capita wealth of $1,100, and Indonesia with assets per head of $1,400.

Many African nations as well as North Korea and the poorer Asia Pacific nations were places where the worst off lived.

"These levels of inequality are grotesque," said Duncan Green, head of research at Oxfam. "It is impossible to justify such vast wealth when 800 million people go to bed hungry every night. The good news is that redistribution would only have to be relatively small. Such are the vast assets of the rich that giving up a small part of their wealth could transform the lives of millions."

Madsen Pirie, director of the Adam Smith Institute, a free-market thinktank, disagreed that distribution of global wealth was unfair. He said: "The implicit assumption behind this is that there is a supply of wealth in the world and some people have too much of that supply. In fact wealth is a dynamic, it is constantly created. We should not be asking who in the past has created wealth and how can we get it off them." He said that instead the question should be how more and more people could create wealth.

Ruth Lea, director of the Centre for Policy Studies, a thinkthank set up by Margaret Thatcher, said that although she supported the goal of making poverty history she did not think increasing aid to poorer countries was the answer. "It's no use throwing lots of aid at countries that are basically dysfunctional," she said.

The UN report was issued as the Swiss magazine Bilan released a list of the richest Swiss residents. Ingvar Kamprad, the founder of Ikea, topped the list with an estimated fortune of $21bn.

In fiscal 2006, which ended on September 30, foreign military sales notified to Congress reached $20.9 billion, nearly double the $10.6 billion the previous year.

Last year's total was second only to 1993, which topped $30 billion, swollen by sales to the Middle East after the first Gulf War.

Regional security concerns tied to Iran and North Korea were helping drive current sales, Kohler said.

He said Saudi Arabia, for instance, was talking to the United States about shore-hugging littoral combat ships that could cost billions of dollars in coming years.

The ships were of particular interest to the Saudi Navy's Eastern Fleet "that would first confront Iranian aggression if there is any." The Eastern Fleet also was largely responsible for protecting Saudi oil infrastructure in the Gulf, Kohler said.

Such ships, costing some $220 million apiece, are designed to counter submarines, small surface attack craft and mines in heavily contested areas near shore. Different versions are being built for the U.S. Navy by teams led by Lockheed Martin Corp. and General Dynamics Corp..

The United Arab Emirates also was considering purchases designed to boost its naval capabilities, missile defense and command and control, Kohler said.

Sales to Iraq, including armored personnel carriers, plus equipment for Afghan government forces would total about $3 billion in fiscal 2007, about the same as last year, he said.

North Korea, which defied global pressure this year to test-fire missiles and carry out a nuclear test blast, is also spurring arms purchases, Kohler said.

Looked at over the past 25 years, things don't get any better. From 1979 to 2004, 'the bottom 60 percent of Americans, on average, made less than 95 cents in 2004 for each dollar they reported in 1979,' the Times reports. For those on the top 95th to top 99th rungs of the income ladder, the past quarter century was splendid: Their income went up 53 percent. And those on the top 0.1 percent rung? Their income went up 348 percent.

That is obscene.

We have a plutocracy in this country, not just of the rich or the very rich but of the unbelievably rich. This 0.1 percent are the ones who benefit most from the George Bush economy.

As he once put it, "Some people call you the elite. I call you my base."

Meanwhile, the poorest 60 million Americans "reported average incomes of less than $7 a day."

Seven bucks a day! That barely gets one meal at McDonald's.

Our economy is a sin.

We cannot call ourselves a moral people and let this kind of maldistribution continue, particularly when it brings suffering to millions and millions of people.

I do believe we should have higher taxes on that top 5 percent, and especially on that top 0.1 percent.

I do believe in preserving, or even increasing, the estate tax.

But I'd settle simply for a floor of decency, so that no one has to go hungry or survive on only that one McDonald's meal a day, no one has to go without health care coverage, no one has to cut prescription pills in half to make the medicine stretch, no one has to work 50 or 60 or 80 hours a week just to take care of family.

To build this floor of decency, we need to guarantee every American health care, every American the right to a free college education, every American an annual income of, say, about $20,000 or $25,000.

This guaranteed annual income, an idea espoused by people stretching from Martin Luther King Jr. to Milton Friedman, would remove the cruel coercion of the marketplace and outlaw the immorality of letting tens of millions of people suffer.

In some ways, our economy would still be grossly unfair, with that top 5 percent and that top 0.1 percent raking in enormously disproportionate amounts.

But at this stage, the greater sin is not gluttony. It is poverty. It is hunger. It is economic uncertainty. It is lack of opportunity.

So I don't care as much about there being no ceiling for Paris Hilton.

I care more about there being no floor for tens of millions of people.

We need to start building that floor of decency today.

An analysis shows many of the year's nearly 18,000 Denver metro-area foreclosures fall in what is being called the "foreclosure belt" of Adams and Weld counties and north Aurora, while upscale neighborhoods are nearly unscathed.

Observers say Denver's hot market for mortgage fraud has created what one called a "Wild West" atmosphere that has left buyers trapped in bad loans with no way out.

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is the search for a superior moral justification for selfishness."
John Kenneth Galbraith

"The Great Depression [1929-39], like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy."
Milton Friedman

"Economic freedom is... an indispensable means toward the achievement of political freedom."
Milton Friedman

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."
John Kenneth Galbraith

Economist John Kenneth Galbraith (1908-2006) died on April 26, 2006 at the age of 97. Economist Milton Friedman (1912-2006) died on November 16, 2006 at the age of 94. Along with the great John Maynard Keynes (1883-1946), these two economists dominated the field of economics during the second half of the 20th Century. There existed such an intellectual competition between the two economists-not unlike the rivalry that prevailed between President Thomas Jefferson (1743-1826) and President John Adams (1735-1826), who both died on the same day- that Galbraith's death may have influenced the time of Friedman's death.

Both were influential in framing the general economic debate and in steering general economic policies within their own country, but also abroad. For one, Galbraith was an advisor to Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy and Lyndon B. Johnson. Similarly, Friedman's ideas strongly influenced the economic policies of, among others, British Prime Minister Margaret Thatcher, American President Ronald Reagan and Chilean President Antonio Pinochet. He also persuaded the Nixon administration to abolish military conscription.

John K. Galbraith's most influential book was The Affluent Society (1958), in which he proposed the idea that post-war private expenditures were generating marginal social benefits that were lower than would be derived from increased public expenditures on needed economic infrastructures and social programs. The general principle here is that public expenditures should be increased until one marginal dollar spent publicly generates the same marginal social benefit as one marginal dollar spent on private goods and services. This is still a fundamental precept of modern economic welfare theory.

Milton Friedman, for his part, espoused the 18th Century French physiocrats' economic philosophy that government should interfere as little as possible with the efficient functioning of free markets, according to the fundamental law of supply and demand. He advocated laissez-faire capitalism and free market economics. In his most important work, Capitalism and Freedom (1962), Friedman became the universal champion of all those who advocate low taxation and small government.

Both economists, just as Keynes previously, were influenced by the pressing economic problems requiring solutions at specific times. During the immediate post-war years, after the onslaught of the Great Depression, and after the war-time price controls and rationing, private wealth was increasing at a fast pace (new houses, new cars, etc.) while schools, hospitals and roads were not catching up with the new demand for economic infrastructure. The international environment was also characterized by fixed exchanges rates, a high level of trade protectionism, and controls on international capital movements. In such a context, fiscal policy was deemed to be more potent and useful than monetary policy. Thus Galbraith's fiscal approach to solving society's problems of resource allocation and economic stabilization.

In the 1970's and 1980's, after two damaging, successive oil supply shocks, and the rise of inflation, the need was to isolate the economy from these external shocks, through the adoption of flexible exchange rates and through a more predictable monetary policy. Thus Friedman's emphasis on flexible exchange rates and on a more responsible management of the money supply. To a large extent, Galbraith's more Keynesian approach to economic management and Friedman's more monetarist approach to economic stabilization were a reflection of the different economic environments in which they applied their theories.

As far as economic stabilization is concerned, for example, that remains an empirical appreciation if, for a given economy, at a specific time, fluctuations in government surpluses and deficits are more or less efficient than fluctuations in interest rates in influencing private investment and private consumption. There are situations where private expenditures are very responsive to movements in real interest rates, i.e. to nominal interest rates minus inflation expectations. In such normal times, monetary policy alone can be relied upon to stabilize the overall economy, while public budgets remain balanced.

However, there arise situations of market failures when excessive market power by a few large corporations or excessive herd-like speculation by the many create destabilizing bubbles in crucial sectors of the economy. Economic psychology could become so universally depressed that no amount of monetary stimulus could jump start the economy. Japan is an economy that found itself in such a predicament during the 1990's. At that time, nominal interest rates were pushed to near zero, their absolute low, but real interest rates remained high due to a generalized deflation and high deflationary expectations. When an economy falls in such a 'liquidity trap', fiscal policy may become the only avenue left to stimulate the economy, with increased public deficits. It becomes a matter of political ideology if such deficits should be generated through tax reductions or through increased public expenditures, or both.

Philosophically, 'liberal' Galbraith would be more inclined to favor enlarged public expenditures, while 'conservative' Friedman would prefer to keep as much money as possible in private hands. Both would agree, however, that the government is the last arbiter when economic conditions in the private economy deteriorate, either through destructive inflation, imported or domestically produced, or through an economic slump, that generate widespread unemployment of both workers and machines. It should be no surprise if Friedman's prescriptions are more welcomed in times of prosperity, while those of Galbraith and Keynes would be readily adopted in times of economic crisis. This has been a pattern often observed in the past. For example, before the Great Depression, 'Laissez-faire ' capitalism was politically dominant. However, the role of government was rediscovered when poverty, income inequalities and unemployment became widespread. This is to be expected in a democracy, where the wishes of the median voter normally carry the day. The same ambivalence toward economic policies will no doubt prevail in the future, as people ride the consequences of economic cycles. Thus, there will surely be future Galbraiths and future Friedmans in the economics profession.

Posted, December 4, 2006, at 5:30 am

http://www.TheNewAmericanEmpire.com/tremblay=1047

Normally, the North American tectonic plate moves in a northeast direction, about 8 millimeters a year. We don't even notice its movement. But scientists have found that every 14 months or so, the plate seems to reverse course, sliding backwards for between 6 and 15 days. It happened in July 1998, August 1999, December 2000, February 2002 and September 2005. It's now due.

In anticipation, researchers have set out an array of monitors and are watching them closely.

In November, those monitors began picking up movements in the Vancouver Island area but they stopped after a just a few days. Scientists don't believe those shakes are linked to a silent earthquake. They say once the deep tremors start they'll definitely know it.

"There's normally snow here. Unfortunately this year it didn't arrive in time," Martin Frieder, the town's tourist office spokesman said, adding: "Last winter we had 8.7 metres of snow."

An unseasonably warm autumn has wreaked havoc in Alpine ski resorts, postponing the winter season in Austria, France, Germany, Switzerland and Italy. Instead of snow all around, most slopes are still covered in green grass.

Yesterday climate experts confirmed that the warm temperatures - including 22.4C recorded last week in Grenoble, the capital of the French Alps - were unusual.

"We are experiencing the warmest period in the Alpine region in 1,300 years," said Reinhard Böhm, a climatologist at Austria's Central Institute for Meteorology and Geodynamics. "It will undoubtedly get warmer in the future."

The lack of snow has also affected ski resorts further afield, with all 31 skiing areas in Spain and Andorra closed, said the newspaper El País.

Andrea Händel, of the German Alpine Association in Munich, said it is too warm for artificial snow machines to work. Snow is now forecast within days.