Sunday, August 14, 2022
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Will the next crisis sweep away the rich?

Faced with the prospect of a possible imminent financial crisis, we wonder if the rich, this time, also have something to fear. Or do we live in a economy structured to protect their interests?

More and more voices are warning us about the possible advent of a new financial crisis. Even in a mass media scenario, in which each "opinion maker" or "expert" present their theses influenced by doctrines and diverse ideologies, the predictions and the arguments that are heard begin to be centred around a common idea and that the chorus of alarmed voices seems to refer to a real threat.

More and more voices are warning about the possible advent of a new financial crisis. 

It is as if we were seeing a tsunami growing on the horizon again, and from the shore, there is the fear that a new crisis will once again sweep the markets, when we are still removing the debris from the previous disaster.


Just over a month and a half ago, Ignacio Crespo, the Spanish economist who successfully predicted the financial crisis of 2008, set the date for the next financial collapse and placed it quite close by, in 2017: "The world's great banks study services are already beginning to perceive clear symptoms of the next recession, based on the analysis of signals such as the exchange rates of the world's major currencies and stock exchanges, the expected duration of the recession and the way out”.

If this is disturbing to you, look at Jim Rogers, the American investment expert who has been able to predict each of the financial crises of the last decades: "This is going to be a disaster, we should be quite worried and prepare". In statements made by the Wall Street Daily, Rogers states directly that "the next global financial crisis has already begun and will have serious consequences for developed countries. Hundreds of billions of dollars of wealth will vaporize and many old institutions, political parties, governments and customs will decay or disappear".

Spanish soil also sees the shadow of a new crisis that hovers over the economy. A few days ago the newspaper El Mundo echoed disturbing news: "The same inspectors of the Bank of Spain who without success in 2006 alerted us of a real estate bubble that would unleash a banking crisis in the country raise their voices once again. Now they have exploded over the deterioration in the banking inspections and the danger that the mistakes of the past might be repeated again.


Everything indicates that we are not on very stable economic ground. but does this include everyone? It does not seem so. Earlier this year, Intermon Oxfam published a document whose main conclusions were devastating. We live in an economic system that works in favour of 1% of the world population. 

The figures were as interesting as they were bleak: by 2015, just 62 people owned the same wealth as 3.6 thousand million, the poorest half of humanity. In 2010, it was 388 people.

In addition, the same report indicated that this overwhelming inequality has a perverse tendency to grow within a socioeconomic system that clearly feeds it: "The wealth in the hands of the 62 richest people in the world has increased by 44% in just five years, slightly more than half a trillion dollars (542,000 million) since 2010, reaching 1.76 trillion dollars".

The Intermon Oxfam report does not limit itself to merely reporting data, but rather interweaves quite illuminating reflections, that together with the figures, paint a picture of an exaggeratedly unjust reality: "It is undeniable that the great beneficiaries of the world economy are the ones who have the most. Our economic system is increasingly distorted and orientated to favour them. Far from reaching out to the less favoured sectors, the richest are absorbing world income and wealth growth at an alarming rate. Once in their hands, a complex network of tax havens and a whole industry of managers of vast patrimony guarantee that this wealth is not redistributed, being out of the reach of Governments and the general public as a whole".

And in Spain? The data is equally worrisome. An annex of the same study indicates that "Spain is no exception: by 2015, the richest 1% of the total population already has almost as much wealth as the poorest 80%. Meanwhile, everyone in situation of poverty and exclusion has reached a historical maximum in 2014: 29.2% of the total population, 13.4 million people." As for the growth trend of this inequality, the figure is also alarming and, curiously symmetrical: "Spain is also the country of the OECD where inequality has grown most since the beginning of the crisis, only just behind Cyprus, and almost 10 times more than the European average, and even 14 times more than in Greece". 

The report notes that over the past year, the 20 richest people in Spain enjoyed a 15% increase in wealth. It is the same percentage that was the reduction of wealth that 99% of the total population of this country had to endure.


The data is so significant that 99% has become a new synonym to refer to the "oppressed", or "outraged", those who also claim to be part of "the 99%. " Not surprisingly, it became the motto of the Occupy Wall Street movement (We are the 99%) and we have heard it recently in the Spanish pre-election campaign, from the mouth of communist politician Alberto Garzón, leader of the United Left. This is not unusual, given that the distribution of wealth in Spain is just as unfair as in the global computation of the planet. However, the Spanish Right, in power, does not seem to be aware of the seriousness of the situation

At the end of that year, 2015, Álvaro Nadal, as director of the Economic Office of the President of the Government, declared that "it is not true that the problem of the Spanish economy is inequality" and explained that "the whole spectrum of The Left says that the problem of the Spanish economy is a problem of inequality, of distribution of wealth. This is incorrect. We will not solve our poverty problems by looking at this factor, but rather solving our competitiveness problems", according to El Plural.

Perhaps their position is better understood if we take into account that the December elections were approaching. However, in light of the data, it is quite difficult to agree. At least Intermon Oxfam insists on the opposite: "While the poorest households have been losing purchasing power through wages and an increasingly regressive fiscal model, the concentration of wealth and property in very few hands has kept growing".


A recent article authored by the economist Vicens Navarro and published on the website of the association Attacc establishes a clear connection between both phenomena. Navarro states that "one of the most significant causes of the Great Recession and that it was so protracted was the great growth of inequality, the result of implementing what we call known as neoliberal public policies". In their view, the diagnosis is so irrefutable that "even a large number of international bodies responsible for promoting such policies, such as the International Monetary Fund or the OECD, are finally questioning the implementation of such neoliberal measures, which are still reproduced and promoted in most of the Eurozone countries". 

To conclude, Navarro regrets that "in Spain such questioning has not yet occurred, partly because of the quite limited diversity in the ideological of the largest news and opinion media. The enormous lack of ideological diversity of these great media -clearly influenced by banks, whose lines of credit support them- explains that in Spain, even conventional wisdom is stuck in such thinking.

In conclusion, it seems that, as is often said, and as history has stubbornly confirmed, the capitalist neoliberal system, both locally and globally, is bound to produce periodic economic crises. Some indications suggest that we are, once again, in the beginning of one of them. And it also seems that, once again, the richest will not only come out unscathed, but will probably become richer still. So we can establish that the relationship between inequality and economic crises does not only exists and directly so, but it is also cyclic and reproduces itself constantly. 

So, is this system sustainable? And if it is not, how much time do we have left? There are those who already predict its end, but the truth is that it is still very much alive. And so long as it is, it seems that the rich, "the 1%" are safe.



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