Morgan Stanley Strategist Returns, He Has A Big Warning To Investment Community About Inequality

http://www.businessinsider.com/gerard-minack-warning-to-finance-workers-2013-10

When Gerard Minack quit as Morgan Stanley’s global chief equity analyst earlier this year many on Wall St were sad to see him go. His market update, Downunder Daily, was required reading in many quarters.

Now Minack is working out of Sydney where he’s set up a business, Minack Advisors, and is publishing Downunder Daily to the investment community.

We got hold of a note this week in which Minack looks at the income disparities in the US over the past century. He has a message for investors and the finance industry: you’ve never had it so good, because the last time investors and the workers in associated industries saw earnings this strong, compared with everyone else, was the 1920s.

“Inequality has not risen because the rich got richer faster than the poor,” Minack writes. “It increased because the income gains of the past 30 years have gone to the top 1%. Average income for the bottom 99% is now unchanged in real terms over the past 40 years (Exhibit 3). The rising tide did not lift all the boats: it floated a few yachts.“
The chart he’s referring to is on the right. Minack – not unknown for bearishness – continues:

In 2012 the highest-paid 1% earned 21½% of total income, according to academic Emmanuel Saez (http://elsa.berkeley.edu/~saez/). This is the highest share since the 1920s. The lift in top-end income mainly reflected a rise in business income and salary payments. Exhibit 4 shows the source of income for the highest paid 0.1%, as a percentage of total US income. The income share of the highest paid did not increase just because capital has done better than labour: it also reflects the increase in the share of salaries going to the highest paid.




Read more: http://www.businessinsider.com/gerard-minack-warning-to-finance-workers-2013-10#ixzz2iRroPhdp


***fresh brewed irony for you in the morning.