Floyd Norris points out that $350 champagne has replaced steep tax rates as a way of redistributing income. During the Eisenhower years, for example, the top marginal rate on incomes over $100,000 – about $3 million in today’s Fed-cheapened currency – was 91%. Outrageous executive salaries were still decades ahead. And then, it was considered natural and normal that capital gains should be taxed at a higher rate than ‘earned’ income.
So, the levelers can stop worrying. As soon as people get their hands on a little money, whole industries arise to take it away from them. Yesterday, for example, we learned that the watch business is exploding. Now, you find watch boutiques in Moscow, St. Petersburg, and all over Asia and the Near East. Expensive watches are selling so fast that manufacturers can’t keep up.
Super deluxe houses, too, seem to be defying the general trend. All over the world, people are building palaces for the rich. We picked up a copy of a magazine – International HOMES Investor. Sounds like a contradiction, to us. A place is either a home (where you live)…or it’s an investment – never both.
But opening up the magazine and we find luxury properties everywhere – Portugal, Turkey, Greece, Costa Rica, Florida…even Las Vegas…and all with the sotto voce assurance that not only is this going to be a glamorous new lifestyle for the buyer, the properties are going to go up forever and aye! You can get a ‘Slice of Heaven on Earth’ in Bonita Springs, FL, according to one ad. Or own a ‘Charming Villa…sea…golf…in Spain.” How about Tenerife? The Cayman Islands? Egypt!?
At first, we thought these were houses that rich people bought when they wanted to part with their money. Instead, we find they are places ordinary people buy when they take leave of their senses.
Here’s a ‘Case Study,’ offered by the magazine. “Paul Percival, a self-employed upholsterer in South Wales, has recently invested in a two-bedroom cabana costing $750,000 at Buccament Bay Resort in St. Vincent. He says: ‘Investing into the profitable overseas property markets seems like the best possible way to make the most of my capital at this time.'”
In addition, we find that he’s invested in two properties in the Dominican Republic…and that “these investments [sic] have given me great faith and peace of mind…”
We cross ourselves. God help him.
Markets and Money