How Shadow Banking and Extreme Wealth Inequality Threaten Us

[xchrom]

http://www.alternet.org/economy/how-shadow-banking-and-extreme-wealth-inequality-threaten-us



The evidence presented in this report thus far makes a very solid mathematical case for significant systemic change. However, to get a more complete understanding of how corrupt the global economic system is, we also need to factor in wealth that is hidden from public view. Disregarding trillions of dollars in hidden wealth just because the wealthy have the ability to illegally hide it is an absolute injustice. It is completely ignoring a critical aspect of what is now the greatest theft of wealth in human history.

Hidden wealth estimates vary widely. Many of them only take a partial look at the most basic methods of offshoring wealth. Given the unprecedented growth of wealth over the past generation, the secretive methods used to hide it have evolved far beyond well-known tax havens in Switzerland and small-island jurisdictions such as the Bahamas. While estimates based on banking secrecy and tax havens help to give us a more accurate picture of overall wealth, they do not give a total view.

Research by Gabriel Zucman, which analyzed banking secrecy, estimated that “around 8% of the global financial wealth of households is held in tax havens.” If we correlate this 8% with the $82 trillion in accounted for wealth reported by the Federal Reserve, that would be an additional $6.6 trillion for the wealthy, bringing the richest 1% up to roughly $39 trillion in overall wealth.

However, to get a more complete understanding of the reality of the situation, the most wide-ranging look into hidden wealth was done in 2012 by economist John Henry in partnership with the Tax Justice Network (TJN). They estimated that there was $21- $32 trillion hidden globally at the end of 2010. As shocking as that sounds, that estimate still did not give a complete view of hidden wealth. As they put it, “We consider these numbers to be conservative. This is only financial wealth and excludes a welter of real estate, yachts and other nonfinancial assets owned via offshore structures.”

[pampango]

1. Nice article, xchrom. Thanks for posting. Countries have to act globally to deal with this.

Countries acting individually cannot solve the problem.

[xchrom]

2. ...

[Octafish]

3. I'm so old I remember when wealth inequality resonated among Democrats.

Hmmm. If only there was a way to make economics as interesting as a cartoon image for DUers!

[leftstreet]

4. LOL

That took me a minute!