THE HIGH-BETA RICH: How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust
Who knows how many of those hunkered down in Occupy Your Town protests keep up with the work of veteran Wall Street Journal wealth reporter Frank, but his new book skewers the so-called 1%, or at least the “high-beta” portion of it. The term is normally used in the markets to describe stocks whose rises and falls are exaggerated beyond those of the market in general. These are not your father’s plutocrats, these “human tech stocks of our economy, prone to violent swings and rapid cycles of value creation and destruction.”
Fine, if nobody else is affected; it’s hard to muster sympathy for the bankrupt billionaires who have had the coral repossessed from their giant aquariums. But Frank believes we’re seeing “growing contagion from their financial manias.” For one thing, their outlay is even more volatile than their incomes, and when the top 5% of earners account for 37% of consumer spending, it draws the broader American economy into their influence. For another, governments dependent on tax revenue from high earners suffer the fallout from their losses. In one chapter, Frank unpacks the worst budget crisis in California’s history, a result of the vaporization of high-beta wealth in the dot-com bust. It’s no longer the only government made so vulnerable.