The losses hurt families but leave the rich only less rich
Don't worry -- Gates and CEOs are still doing just fine
Imagine losing billions and still having billions. Getting a smaller bonus but still getting one. Vs. really feeling the biggest quarterly net worth drop in history. We trim and blend three 2009 articles from: (1) Forbes, on billionaires by by Luisa Kroll, Matthew Miller and Tatiana Serafin, Mar 11; (2) Miller-McCune.com, Mar 4, on CEO pay by Tom Jacobs; and (3) AP, Mar 12, on household worth by Martin Crutsinger.
by Kroll, Miller, and Serafin, and by Jacobs, and by Crutsinger
Gates regains top spot on a much smaller billionaires' list
Today there are 793 people on Forbes' list of the World's Billionaires. Since last year, 373 fell off the list -- 355 from declining fortunes and 18 who died, a 30% decline.
It is the first time since 2003 that the world has had a net loss in the number of billionaires.
Their collective net worth is $2.4 trillion, down $2 trillion from a year ago. Their average net worth fell 23% to $3 billion, where it was in 2003.
There are 38 newcomers, plus three returners.
Bill Gates lost $18 billion but regained his title as the world's richest man. Warren Buffett, last year's No. 1, lost $25 billion as shares of Berkshire Hathaway fell nearly 50% in 12 months, and slipped to No. 2. Mexican telecom titan Carlos Slim Helú also lost $25 billion and dropped to No. 3.
The biggest loser this year was last year's biggest gainer. India's Anil Ambani lost $32 billion -- 76% of his fortune -- as shares of his Reliance Communications, Reliance Power, and Reliance Capital collapsed. Ambani is one of 24 Indian billionaires. India is no longer the top spot in Asia for billionaires, ceding that title to China, which has 28.
Twelve months ago Moscow overtook New York as the billionaire capital of the world, with 74 tycoons to New York's 71. Today there are 27 in Moscow and 55 in New York.
After slipping in recent years, the U.S. is regaining its dominance. Americans account for 44% of the money and 45% of the list's slots, up 7% and 3% from last year, respectively. Still, it has 110 fewer billionaires than a year ago.
While 656 billionaires lost worth in the past year, 44 added to their fortunes. Those who made money did so by catering to budget-conscious consumers (discount retailer Uniqlo's Tadashi Yanai), predicting the crash (investor John Paulson), or cashing out in the nick of time (Cirque du Soleil's Guy Laliberte).
Among the more notable new moguls are Mexican Joaquín Guzmán Loera, one of the biggest suppliers of cocaine to the U.S.; Wang Chuanfu of China, whose BYD Co. began selling electric cars in December, and American John Paul Dejoria, who got the world clean with his Paul Mitchell shampoos and sloppy with his Patrón Tequila.
Downsizing CEO Paychecks
The median pay raise for the 1,864 chief executives who received one in 2007was 7.5%. That's the lowest rate of increase in six years. Total annual compensation, which includes base salary, bonuses, and perks, was a median 4% higher, bringing median annual CEO compensation to $1.1 million.
Food and tobacco executives were the top paid, with median total compensation for CEOs at $6.34 million.
CEOs are increasingly receiving compensation in the form of company stock rather than cash, which is good news for reformers who advocate linking executive pay to company performance.
Between 1995 and 2007, the U.S. personal savings rate dropped from about 9% to around zero (and fell into negative territory for a time, meaning we spent more than we earned).
The savings rate in 2008 jumped from 0.2% in the first quarter to 2.4% in October and 2.8% in November. It hovers around 6% in Great Britain and 10% in Spain, Germany, and Japan.
Household net worth plunges by record amount
The net worth of American households fell by a record 9% in 2008's October-December period compared to the third quarter. That was the biggest decline on records that go back to 1951.
The drop represented a loss of $5.1 trillion in family net worth, leaving the total at $51.48 trillion at the end of the year. Net worth adds up homes, checking accounts, etc minus mortgages, credit card debt, etc.
The big loss was stocks, which slashed Americans' holdings by 23.2%.
That estimate was nearly identical to the 23.5% loss in the Wilshire 5000, which tracks publicly traded common stocks. Since peaking in October 2007, the Wilshire 5000 has shed 53% of its value.
Another fall was land under houses, the biggest asset held by most American families. Home sites declined by 3.8% in Q4, compared to the July-September period.
That estimate was identical to the 3.8% decline in home prices for the fourth quarter in the Case-Shiller index.
Since peaking in the first three months of 2006 (after five straight years of sharp increases), home prices have fallen by 25% with many economists expecting they will fall another 20%.
The decline in net worth was the sixth-straight quarterly drop. It hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since.
The record 9% drop in the fourth quarter shrunk net worth to $51.48 trillion, 20% below the peak in 2007.
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