Rich People In This Economic Crisis

I overheard a conversation on a bus, the two were talking about the recession and how prices are going up and people are not buying cars etc…

Then one of them says “But since the stock market is also so bad, even the really rich are gonna be hurting.”

I just got to thinking, will people who are well off be stunted by this economic downturn or recession or whatever you want to call it.

I mean I walk around Lincoln Park in Chicago and see all the double income Yuppies driving their huge SUVs in their $2,500/month flats, the resturaunts are packed everynight.

While in my neighborhood, (lower income) I see people complaining about Milk and eggs going up and coffee and bread increasing. We’ve had resturants that are empty in my neighborhood.

So I guess the question is does the banking situtation really hit the people making a large income, say like over six figures? I realize it’s different for everyone but in general, or is it the middle class and below that are gonna be hurt.

Again like I heard holiday shopping will be bad, but places like Wal-Mart will do OK 'cause people will buy from cheaper stores and high end retailers will suffer.

Well, my sister was complaining the other day that they can’t take the jet out for personal use anymore as the price of jet fuel has gotten out of hand. She now has to fly the airlines in first class. She’s really bummed about it. And no, I am not making this up. I really wanted to reach through the phone and smack her.

As you say, it depends where you live. I live in the SF Bay Area so making six figures doesn’t really make you rich. But to answer your question, yes, to a certain degree, this impacts almost all except the super rich. Most people making six figures have at least some of their money in the stock market so losing 25+% of the value of your investments is going to hurt. Is it the end of the world? Probbaly not, unless you are leveraged to the max and can’t meet your financial obligations…

Thurston Howell III would be complaining. The real old money around here (in NE) are incredibly cheap. They never spend a nickel if they don’t have to…they wear their grandfather’s suits, and drive old Chevies. The people who really are in trouble are the pseudo-rich who buy all the designer clothes and expensive cars-their debt level is very high. I suspect we will see a LOT of stuff ofr sale cheap-as these people need to raise cash.
It reminds me of talking to a guy who owned a pawn shop in Dallas, Texas-in the last recession, he was flooded with those tacky gold Rolex watches-and every guy pawning them had a story.

We make that much and yes - it changes things. We will wait for the market to recover before making any capital decisions - i.e. we will only be spending what we make (which we normally do anyway and save the rest), and will put off purchasing anything that relies on savings - if the market stays down years, that will mean no new cars, vacations, etc. If there is something time sensative, then we will need to punt (thank God the kids are a decade from college).

It depends on the plays the “rich people” have made. If they’re 80/20 stock/bonds, they may be losing value on paper. If they’ve been in money markets, treasuries and bonds, they’re making out better than anyone invested in mostly stocks.

Um… if you spend what you make, what “rest” are you saving?

I can’t answer for anyone else, but it’s a good idea to roll interest or dividends earned back into the principal of your CD, your mutual fund, etc. You can pull the interest or dividends off as earnings, but it’s better to use them to raise your principal.

It’s the little economies that add up.

Addressing the OP, the first financial advice I ever got in college, and this was from engineering professors, was to save up at least six month’s salary in something liquid. It’s your ‘no, I won’t sign that engineering drawing, I’ll quit first’ savings. I’m guessing most people who get investing advice also hear this. So once you have enough of an income to start investing, you get advised to create a nest egg that will buffer you from short term recessions.

And, no, I don’t have six month’s salary saved up. Workin’ on that. My fiscal virtue resides mostly in my 457.

I think what she means is that she won’t spend beyond her income. Meaning, having to use credit and/or savings.

Well, I hardly feel “rich” with my GF and I living in a 1BR in Hoboken, NJ but we both make six figure salaries in financial services companies.

On the other hand, we own our place and the mortgage is relatively cheap compared to renting across the river in Manhattan.

My 401ks are down significantly but I’m still a good 30 years away from retirement.

I’ve shifted most of my stock portfolio into T-bills and CDs for now.
Basically, we aren’t in danger of becoming homeless anytime soon. In fact we just came back from a vacation in Europe. We still go out to dinner when we want and I’ll still grab drinks with my buddies.

The problem is more of a general sense of angst and negativity. Her company has been going through rounds of layoffs. I hate my job, which I had to take after getting laid off six months ago. I liked being a management consultant. I don’t like being a middle manager in some giant insurance company, even though it pays better and is more stable. The problem is that there aren’t a lot of jobs out there in our fields if one of us gets laid off or if we want to find less depressing jobs.

Not to sound like too much of a D-bag but it can be very depressing going from bottle service at the Gansevoort and client steak dinners at Smith & Wollensky to working in an unfunny version of Office Space.

According to this article Lakshmi Mittal, Britain’s richest man, has been losing about £6 million (roughly $10 million) every hour for the last four months. He’s still massively rich, but if he had any multi-billion-dollar expansion plans he’s probably put them on hold. Similarly, there are apparently a lot of russian oligarchs in a spot of bother because they’ve borrowed billions to build their empires and they’re now facing margin calls of multiple billions since their assets have plummeted in value.

None of them are going to be skimping on dinners, but I’m sure they’re feeling a major pinch in the ego.

Where is here?:confused:

I assume NE meant New England. Probably either around Farfield County, CT, Newport, RI or Cape Cod, MA.
There’s also a lot of people who thought they were going to be rich or were rich who won’t be rich anymore. Although it’s hard to feel bad for some investment banker who was making $600,000 a year and now isn’t and has to worry about how he’s going to keep his bitchy trophy wife satisfied. But somehow, I think those people will be a’ight