Selected Analysis

The West’s decision to break away from the East has caused the worst recession since 2008

by Eric Zuesse, Oriental Review

The West’s economic sanctions — and especially the secondary sanctions which the U.S. Government threatened to apply to countries that violate the U.S. sanctions — radically changed international-trade patterns in 2022, and now appear to have caused a decline in the world’s total private wealth for the first time since the 2008 economic crash. However, since these disruptions, that were caused in international trade by the international sanctions, actually harmed the richer countries (the countries that applied the sanctions) far more than the poorer ones (which largely ignored the sanctions), this was a boomerang hit by the rich against the rich, and it consequently redistributed global wealth more evenly. This temporarily reversed the long-term global trend toward increasing wealth-inequality. However, this was typical for recessions, because whereas boom-times are based upon stocks and bonds and other financial assets, which dominate among the rich, busts are declines in the values of those assets, and therefore produce less if any decline in the value of physical assets, which dominate among the non-rich. So: economic equality tends to increase during bust-times, and we are now in an economic bust — a bust that has been created by the U.S.-and-allied war against Russia.

According to the Credit Suisse UBS (CS/UBS) Global Wealth Report 2023, which was released on August 15th, “Measured in current nominal US dollars, total net private wealth fell 2.4% to USD 454.4 trillion, while wealth per adult dropped 3.6% to USD 84,718 at end-2022. Much of the 2022 decline in wealth came from the appreciation of the US dollar against many other currencies.”  Moreover:

Wealth increases among countries were more common overall than wealth losses, but the gains were generally small in magnitude.

Rare exceptions included Russia, Mexico, India and Brazil, which all saw higher aggregate private wealth in 2022.

On a per adult basis, Norway, Singapore and the United Arab Emirates stood out with higher increases of average private wealth.

Interestingly, the countries that lost substantial wealth in 2022 were often those that made sizeable gains the year before. 

The “Figure 4: Change in wealth per adult (USD), 2022 — biggest gains and losses” showed the #1 gainer to be Norway (whose natural-gas sales to the EU soared as Russia’s were being cut off and re-directed to Asia). #2 gainer was Singapore. #3 gainer was UAE (a major supplier of oil and natural gas).

As regards Singapore, that nation is an outlier and has a “miracle” economy like China but maybe even more so, and actually preceded China in being that (whereas Singapore’s “miracle” start was Lee Kuan Yew in 1965, China’s was Deng Xiaoping in 1979); so, one can only guess; but even during the 2008 economic crash, Singapore was unhurt. However, If Singapore’s billionaires and sovereign wealth fund were heavily invested in natural-resources-rich countries such as Norway, Russia, and UAE, that might explain why Singapore turned out to be #2 on this measure.

In the full report from CS/UBS, it says:

While average [mean] wealth rose in Singapore and Norway by more than USD 20,000, these increases are modest in comparison to losses exceeding USD 40,000 in the Netherlands, Canada, Australia, New Zealand and Sweden. Each of these countries had previously experienced wealth growth in 2021, apart from the Netherlands. These reductions refer to nominal US dollars. In real terms, mean wealth fell by another 5.8%, so that the real losses in Denmark, the United States and Switzerland exceeded USD 50,000, the real losses in Canada and the Netherlands were above USD 60,000 and the real losses in Australia, New Zealand and Sweden were more than USD 80,000.

The “Table 2: Market rankings by mean and median wealth per adult, 2022” condenses practically everything. “Mean” wealth indicates per-capita wealth, or the nation’s total wealth divided by its total population; whereas “median” wealth is the wealth of the person whose wealth ranks exactly at the 50% point of the population in terms of wealth — the average person, instead of the average wealth. The mean is always higher than the median (since there is always some inequality of wealth), and the bigger a percentage that difference is, the more unequally wealth is distributed within that population. For example: on the ranking by mean wealth, the richest-per-person country in 2022 was Switzerland, at $685,230. #2 was U.S., at $551,350.  Third was Hong Kong at $551,190.  Fourth, Australia $496,820. Fifth, Denmark $409,950. Sixth, New Zealand $388,760. However, by median wealth, here were the top 6: Belgium $249,940, Australia $247,450, Hong Kong $202,410, New Zealand $193.060, Denmark $186,040, Switzerland $167,350. U.S. ranked 13th on this, at $107,740.

The mean/median ratios there were: Switzerland 4.08, U.S. 5.12, Hong Kong 2.72, Australia 2.00, Denmark 2.20, New Zealand 2.01. The most equalitarian of the richest countries are New Zealand and Australia. However, Belgium, which was the 11th-richest by mean and the #1 richest by median, had a mean/median ratio of 1.41; so, Belgium might be the best of all, in terms of wealth and its distribution. It has only 4 billionaires and a population of 11,700,000. By contrast, for example, the U.S. has 756 billionaires and a population of 330 million. America’s population is 30 times as large, but its number of billionaires is 189 times as large.

Singapore was ranked 8th on mean wealth, at $382,960, and ranked 17th on median wealth, at $99,490. So: its mean/median ratio was 3.84, which would have placed it as the 4th-highest wealth-inequality, and this further suggests that Singapore’s billionaires might have been heavily invested in natural resources.

The report also says that “financial assets contributed most to wealth declines in 2022 while non-financial assets (mostly real estate) stayed resilient, despite rapidly rising interest rates.” So: Non-financial assets retained their value, while financial assets declined in value, but financial assets that were invested in natural resources gained in value, during 2022.

The West’s sanctions against Russia (the country that is #1 in natural resources) seem to have produced a recession on a worldwide basis but one that transferred wealth away from finished products and services and into raw materials (natural resources).

The report goes on to note that “the relative contributions of financial and non-financial assets may reverse in 2023 if house prices decline in response to higher interest rates” (as many expect to happen).

As regards natural resources versus finished products and services: the factors that caused natural resources to become dearer in 2022 (especially The West’s sanctions against Russia) are likely to continue doing so this year; and, therefore, if The West continues its sanctions against Russia and thereby continues to separate the world into The West’s markets versus The East’s markets, then it will probably be continuing to shoot itself in the foot in the economic race that Europe and North America have been waging with hate and contempt against Asia and the global south.

Another highly informative indicator of wealth and of wealth-inequality (including mean wealth, median wealth, and also Ginis, which are the standard measuring-stick on wealth-inequality) on a global level is Wikipedia’s “List of countries by wealth per adult”. Many people who see it are surprised at the data it contains. These data violate many individuals’ prejudices, which have been formed and shaped by incessant propaganda, for political purposes.

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