Capitalism, Socialism and Communism Documentary

Summary

The video script explores the unprecedented accumulation of wealth among the UK's super-rich, facilitated by new financial techniques and a sharp fall in the cost of money, orchestrated by the US Federal Reserve. It highlights the impact of low interest rates and the global supply of credit, leading to a borrowing spree that has inflated asset values and created vast fortunes. The script also delves into the luxurious lifestyles of the wealthy, showcasing extravagant properties and the significant economic contributions of London's financial sector to the UK's growth.

Takeaways

• 💰 The UK is experiencing an unprecedented accumulation of wealth among the super-rich, a scale not seen in 100 years.
• 🏙️ London, particularly its financial services, has been a major contributor to the UK's economic growth, attracting a significant number of billionaires and high earners.
• 💼 The number of Brits earning over half a million pounds a year has surged, with City executives and hedge fund professionals earning substantial bonuses.
• 🏡 The wealth of the super-rich is also evident in the real estate market, with properties in London and its outskirts being sold at exorbitant prices.
• 💸 The creation of wealth among the super-rich is not primarily due to new resources or technology, but rather through financial techniques and leveraging money.
• 📉 The US Federal Reserve's decision to keep interest rates low, following economic downturns and crises like 9/11, has made borrowing cheap and facilitated wealth accumulation.
• 🌐 The global nature of finance has led to a surge in credit availability, enabling both individuals and businesses to borrow heavily, driving up asset prices.
• 🔍 The concept of leverage, or borrowing to invest, has been a key driver in the creation of vast fortunes, as it multiplies profits in a rising market.
• 🏦 Banks have been willing to lend at unprecedented multiples, fueling a borrowing spree among the wealthy and financial institutions.
• 🌐 The UK, under the Labour government since 1997, has been a favorable environment for the new super-rich, with policies that cater to their needs and lifestyles.

Q & A

What scale of wealth accumulation is being discussed in the UK according to the transcript?

The transcript discusses a scale of wealth accumulation in the UK that hasn't been seen for 100 years.

What is the claim about the wealth of the super rich and its impact on the rest of us?

The claim is that the way the super rich create wealth is supposed to make everyone else better off, but the transcript questions this in the current context.

What has been the role of the City of London in the UK's economic growth?

The City of London's financial services have contributed a third of all the UK's economic growth.

How many billionaires are said to call Britain home according to the transcript?

The transcript mentions that more than 50 billionaires call Britain home.

What is the significance of the year 2006 in terms of bonuses for City Executives?

In 2006, 4,200 City Executives took a bonus of a million or more, indicating a significant wealth accumulation among executives.

What comparison is made between the current wealth accumulation and the Industrial Revolution?

The transcript compares the current wealth accumulation to the Industrial Revolution, noting that both periods saw a rapid increase in fortunes but the current one has occurred over a much shorter time span.

What is the role of the US Federal Reserve in the creation of wealth for the new super rich?

The US Federal Reserve played a role by setting low interest rates, which made borrowing cheap and facilitated the leveraging of investments, leading to wealth accumulation.

What is the concept of 'Leverage' as mentioned in the transcript?

Leverage is the concept of borrowing money to invest, which can multiply profits when the value of the investments increases.

How did the lowering of interest rates by the Federal Reserve affect the borrowing spree?

The lowering of interest rates made borrowing extremely cheap, leading to a frenetic borrowing spree among tycoons, financial institutions, and businesses.

What was the impact of the cheap debt on the valuation of assets?

The cheap debt led to an increase in the valuation of assets such as property, shares, art, and jewelry, as people borrowed more against the inflated values.

What is the view of Tom Hunter on the UK being a good place for the super rich since 1997?

Tom Hunter suggests that since 1997, the UK has been a favorable environment for the super rich due to the policies implemented by the labor government.

Outlines

00:00

💰 Wealth Accumulation in the UK: The New Super Rich

The script discusses the unprecedented accumulation of wealth in the UK, particularly among the super rich. It highlights that this phenomenon is not due to traditional means such as finding new resources or exploiting technology, but rather through financial techniques. The city of London, being a financial hub, has seen a significant contribution to the economic growth, with a large number of billionaires and high earners residing there. The script also mentions the luxurious lifestyles of these individuals, including the purchase of extravagant properties. The era of wealth accumulation is compared to the Industrial Revolution during the Victorian age, emphasizing the rapidity of wealth creation in the last decade.

05:02

📈 The Impact of Low Interest Rates on Wealth Creation

This paragraph delves into the role of the US Federal Reserve in facilitating wealth creation among the super rich. The script explains how the sharp fall in interest rates, orchestrated by Alan Greenspan in response to economic faltering and the 9/11 attacks, led to a surge in borrowing. The availability of cheap credit allowed for significant investment in assets, driving up their value and enabling the wealthy to leverage their investments. The script further discusses the global nature of finance and how the actions of central banks, particularly in managing inflation rather than asset prices, contributed to this wealth accumulation. It also touches on the benefits of this economic environment for those in the financial sector, particularly in the UK, where favorable policies have been in place since 1997.

Keywords

💡Fortunes

Fortunes in this context refers to significant amounts of wealth. The video discusses the accumulation of wealth on a scale not seen for a century, highlighting the disparity between the super-rich and the rest of society. The term is used to introduce the theme of wealth creation and its impact on society.

💡Super Rich

The term 'super rich' denotes individuals with vast wealth, often beyond the comprehension of the average person. The video explores how these individuals have amassed their fortunes using new financial techniques and how their wealth contrasts with the financial status of the general population.

💡Financial Techniques

Financial techniques refer to the methods and strategies used to manage, invest, and grow wealth. The script mentions that the new super rich have utilized different financial techniques to enrich themselves, which is central to the video's exploration of wealth disparity.

💡City of London

The City of London is the financial district and the historic core of London. It is often synonymous with the UK's financial services industry. The video uses the City of London as a symbol of financial power and wealth concentration, noting its contribution to the country's economic growth.

💡Billionaires

Billionaires are individuals with a net worth of at least one billion units of currency, typically dollars. The script mentions that more than 50 billionaires call Britain home, emphasizing the concentration of extreme wealth in the country.

💡Leverage

Leverage in finance refers to the use of borrowed money to invest with the expectation that the investment's profits will exceed the cost of borrowing. The video explains how the use of leverage has been a key factor in the creation of vast fortunes, particularly in a period of low-interest rates.

💡Asset Inflation

Asset inflation is the increase in the price of assets such as real estate, stocks, or art. The script discusses how the easy availability of credit led to inflated asset values, which in turn allowed the super rich to borrow more against these assets, furthering their wealth.

💡US Federal Reserve

The US Federal Reserve is the central banking system of the United States, responsible for setting monetary policy, including interest rates. The video explains how the Federal Reserve's decision to cut interest rates in response to economic challenges led to a cheap money environment that facilitated wealth accumulation for the super rich.

💡Borrowing Spree

A borrowing spree refers to a period of excessive borrowing, often to invest or spend. The script describes how tycoons and financial institutions took advantage of low-interest rates to engage in a frenetic borrowing spree, which contributed to the creation of their fortunes.

💡Wealth Inequality

Wealth inequality is the unequal distribution of assets among different segments of the population. The video's theme revolves around the growing gap between the super rich and the rest of society, suggesting that while the wealthy accumulate more, others may be left to bear the costs.

💡Congestive Charge

The congestion charge is a fee levied on vehicles entering certain zones within a city to reduce traffic congestion. The script humorously mentions the congestion charge as being beneficial to the super rich, as it clears the roads for their private transportation, illustrating the divide between their lifestyle and that of the average citizen.

Highlights

Fortunes are being accumulated in the UK on a scale not seen for 100 years.

The new super rich have used different financial techniques to enrich themselves.

They are the big winners while the rest seem to be the losers in the global greed game.

London's financial services have contributed a third of all UK economic growth.

London is the capital of capital, attracting international community and wealth.

Over 50 billionaires call Britain home, a level of wealth not seen since the 19th century.

At least 30,000 Brits now earn more than half a million pounds a year.

In 2006, 4,200 City executives took bonuses of a million or more.

150 people in hedge funds alone earn more than 2 million a year.

The new super rich travel in armored limos and own private airfields.

They've created ghettos of fabulously expensive property.

A North London house recently sold for 50 million, with additional costs for renovations.

A 26-bedroom mansion outside London is on the market for over £70 million.

The mansion has a running cost of over a million a year, accessible only to billionaires.

The new super rich have amassed wealth not through new resources or technology, but through financial maneuvers.

A sharp fall in the cost of money, engineered by the US Federal Reserve, helped them become wealthy.

Low interest rates and cheap credit led to a frenetic borrowing spree.

The power of leverage, borrowing to invest, multiplied their profits in a rising market.

The UK has become a land fit for the new super rich since 1997.

Transcripts

[Music]

fortunes are being accumulated in the UK

on a scale we haven't seen for a 100

years we've been told that the way the

super rich create wealth makes all of us

well a bit better off but does

[Music]

it this time around they've used new and

different Financial techniques to enrich

them

elv and right now they're the big

Winners and we seem to be the

[Music]

losers I'm going to tell you how the new

super rich are making their fortunes and

why we're picking up the bill in a

global greed game

[Music]

in the past few years the city of London

Financial Services have contributed a

third of all our economic growth London

is the capital of

capital London for the International

Community is a beautiful city a lot of

people are living in London that they

might find interesting to meet it's got

the restaurants it's got the clubs it's

got the bars it's got the decent hotels

it's got the nice houses it's safe it's

secure there's a lot going for

it more than 50 billionaires called

Britain home not since the 19th century

have there been such opportunities for

so many to make quite so much

money at least 30,000 Brits now earn

more than half a million pounds a year

in 2006

4,200 City Executives took a bonus of a

million or

more and among hedge funds alone 150

people have been earning more than2

million a

year the only other period we have seen

similar accumulation was during the

Industrial Revolution in the Victorian

age when the whole raft of Victorian

industrialists uh made massive fortunes

very quickly but even that was over a

period of 40 or 50 years

years this has been in the last 10

years when you're coming here with

several billion pounds you travel around

in armored limos guarded by people who

look after you the idea of the

congestion charge is wonderful to you CU

it clears the roads of the Riff raft you

can get out to a private Airfield

quickly to get on your your jet to go

and see farflung operations as part of

your

[Music]

Empire and they've created ghettos of

fabulously expensive

[Music]

property this house in North London

recently sold for 50

million the new owner will be spending

probably another up to3

million creating what will will probably

be the most desirable house in the

world and just outside London is this

brand new 26 bedroom mansion it's on the

market now for over £70 million but it's

the running cost of over a million a

year that means only proper billionaires

need bother to view it even so the

developer lesli Allen verco tried his

best with

me so this is the private swimming pool

is it simply for the owner of the house

yes of course the owner of the house

wants to allow people to use

it the on sweet swimming pool why would

you want five pools you because you got

five pools have you in this house what

family needs five pools you genuinely

need to like

swimming this bathroom area is about 800

square ft putting it into perspective is

about the size of the average

two-bedroom flat in London that's just

for your towels that room it feel rather

disappointed I haven't got one of those

the size of a decent size kitchen

for julan crusted C very good very

ni definitely going to have to have one

of these in my

[Music]

home so how have all these people become

super rich in such a short time unlike

the past it's not been about finding new

resources or exploiting new technology

the Arts are lies in how they've plunged

with money

itself and they were helped to become

wealthy Beyond anyone's Wildest Dreams

by a sharp fall in the cost of money for

them and all of us engineered by the US

Federal Reserve it sets interest rates

for America and in a way for the

world a clear September Day the American

economy was already faltering after the

bursting of the dot bubble and

then the world's most powerful Central

Banker Alan Greenspan feared the

terrorist outrage would further

undermine the confidence of businesses

and consumers so he kept interest rates

unusually low American interest rates

were tonight cut by a half of 1% the

Federal Reserve Base rate now stands at

just 1 and 1/4% the lowest for 41 years

after the bursting of the bubble and 911

Greenspan slashed rates to just 1% and

the supply of credit soar because the

great exporting Nations such as Japan

China and those of the Middle East were

generating vast surfaces and lent much

of their cash to us in the West

Finance is global so it became cheap to

borrow money

anywhere for private individuals and

especially for businesses tycoons and

financial institutions they went on the

most frenetic borrowing spree the world

has seen with so much money slushing

around the price of assets from

paintings to houses to entire companies

sold £65,000

so people borrowed more against the

inflated value of their assets the

valuation of property the valuation of

shares art jewelry etcc was soaring and

the central banks on the whole said this

is not our business we don't manage

assets we only manage price

inflation with markets Rising borrowing

vast sums for investment was the root to

magnificent fortunes it's what Bankers

call using Leverage

Leverage is simply borrowing to invest

you're not investing your own money uh

or you investing part of your own money

but you borrow to invest

more um so that's simply that's Leverage

is borrowing to invest when we borrow

for a mortgage we're

leveraging as simple as

that the power of Leverage to multiply

profits is a common experience for

millions of us who borrow to buy a house

if you put down a

£10,000 deposit when buying a

£100,000 home and borrow the other

90,000 and that house then rises in

value to say

£10,000 well your

£10,000 doubles to

£20,000 you make a 100% profit that's

the magic of using the bank's money to

finance most of the purchase and in a

rising market the more you borrow the

greater your

profits the level of debt that became

available for deals became very very

high and what was really uncomfortable

was that not only was it a high level of

debt but every passing month you could

get more and more

debt with debt so cheap deal makers were

borrowing mind strling amounts to invest

in financial markets in property and in

Commodities or to buy entire

companies Banks were willing to land on

multiples that they'd never known before

the past five six years have been

unprecedented in terms of cheap debt

quite frankly and have we been benefited

from that absolutely you know I would

rather be lucky than clever every time

um so we'll take every bit of luck

that's going our

way and for Tom Hunter Britain was a

pretty good place to be because since

1997 labor has tried to make the United

Kingdom a land fit for the new super

rich well I think first of all you've

got you've got to thank your lucky STS

if you are an economy which has the

vibrant and successful Industries