Recession 2008 is hitting home and knocking also on the doors of the rich, the New York Times reports.
The shrinking economy is causing their stellar incomes (the net worth ranges from $5 million to $1 billion) to drop significantly. Reported cases include a drop form $8 million to $2 million dollar and one from $20 million to $8 million.
Those figures represent drops in income of 60% to 75%.
As money dries up some fear their marriages will break up as they have to curb their extravagant spending.
The problems of the rich aren’t as hard hitting as those of the rest of us trying to make it through the recession and seem to focus on “keeping up appearances”.
“Even if they’re not in danger of not paying their mortgage, there’s still a psychological change. The economy is an issue even for people who don’t need the money.
They fear their kids won’t get invited to the right birthday parties. If they have to give up things that are invisible, they’re O.K. as long as they don’t have give up things visible to the outside world”
None want to give up items that are clearly visible, like selling an expensive car, home or jetplane. Instead they often will sell jewelry rarely worn or take out lines of credit against art collections.
“Most people won’t go to their banker and say: ‘You know I’m in desperate trouble. I need funds.
Most people will just sort of say: ‘Will you sell this for me? When you can get me payment?’ It’s more about the urgency of getting paid.
‘If I sold my Bentley or my important art, they would notice,’ That we hear, in differing examples, every day.”
Of course, as the rich drastically change their spending patterns, in one case tuning a $1.5 million a year budget back to $250,000, the rest of the economy will soon feel that impact as well in an ongoing recession domino effect.
Comment