andEs Corner: Billionaires, a dieing breed

Will we soon see Billionaires on the WWF’s protected species list?

I believe that the very wealthy or Billionaires are on their way out.

Lets start with the most visible: those losing wealth as a direct result of the financial crash. The days of making millions on the financial markets are numbered if not already gone. This seems now to be obvious. The financial sector is slowly moving into the machine it was supposed to be: providing the loans & looking after our savings. In a simple and transparent manner. London has already totally collapsed – others will follow. The vanishing Billionaires from this areaare definitely the most immediate and I am still trying to work out the small talk in the Gate’s household when Bill came home:

“how was your day, darling”

“ah, not so good. I lost $2billion…”

But in parallel to the effects from the financial crash there are other people or industries being effected by totally unrelated factors…

Take a look next at the entertainment industry. Napster is no longer, but in its place a wealth of other “free” download applications have sprung up offering not only music but films, games and other software. The only way that I see that the entertainment industry can fight back is to MASSIVELY reduce the prices of music (€1 album), film (€2 film) and SW (€2 games). At such a level the consumer would likely accepts to pay for ad-free, quality guaranteed and fast download. Preferably also with repeatable downloads – i.e. buy once download as often as you want. This last feature is now a major selling factor as backing up all of this digital media is becoming a nightmare and will become exponentially worse.

Anyway I managed to sidetrack myself a little there… But as you can see it is likely that our superstars in this area will have to take major pay cuts. If the consumer is paying less for the film then the movie industry will be able to pay the superstars less. It’s a bit hard maybe to imagine this particular area having troubles in the week of the Oscars and it won’t happen immediately but the signs are there.

Sports stars will of course suffer as a major area of income for the sports industry is television income which is also already being effected by similar “free” online streaming platforms springing up like grass on a football pitch. In addition advertising revenue will be massively cut back as some reality hits this sector too. Does anybody really choose which operator they phone with or airline they fly with based on a company name on a football shirt? I fly regularly and I know this is not a factor – except I will NOT fly with Emirates cos they paid for Arsenal’s stadium. 😉

Lets move to energy: the oil of the sheiks is slowly losing its black slimey shine as nations and industries strive to gain independence from it. Whatever happens here or how quick this independence is implementable oil is on its way out. And so are the sheiks. At least based on this income stream.

The same will be true of the oligarchs and I think Russia & Ukraine have massively underestimated the mid to long term effects on the **final** end customers of their recent childish fights over gas. Never mind if now the EU governments are now happy – the final end customers have wizened up to what has just happened and I expect to see a massive reduction in new gas central heating systems being setup by your normal Joe Bloggs. People who still have money laying around may swap out their systems now and I am pretty sure that as systems start to get old they will not be replaced with new gas fired systems. I think this is irreversible now as this dependency was made so transparently clear even in the less “intelligent” newspapers.

Finally, lets look at CEOs in general: this, unlike the others mentioned, is not totally independent from the financial crash as it seems even more than before since the crash and the mass of “guilty” CEOs it does appear that their ridiculously high wages are being questioned (in addition to what it is they actually do – but this is the topic for another blog). It seems a little crazy that any CEO should be earning more than the €400k that Obama is getting. I believe simply that companies will not be able to afford this. I seriously believe the Financial Booms are gone forever. A new Boom is coming but again this is for another blog.

Not all of these Billionaires are immediately at risk and likely they will not fall from their yachts as visibly or as quickly as those from the recent meltdown but I think you can see the trend: end of the legendary 5%. Which can only be a good thing. For 95% of us. And the question is: will as many people jump to save them as they did for the pandas?

So with all of these Billionaires on their way out – which will remain? Will the Queen Of England be the last?

PS. I have set up an ebay search agent for cheap second hand yachts 😉

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