Stealth Wealth Hiding in Plain Sight
For security purposes, the Great Recession served as an excellent training course, a primer, for the wealthy and how to seamlessly blend in with the “unwashed” without arousing suspicion from the lower socio-economic, potentially resentful, desperate and possibly dangerous citizens if the proverbial excrement hit the fan such as a global economic meltdown. As the socio-economic inequity widens even further during and after Covid-19, the resentment and blowback against the wealthy will reach epic proportions.
For the savvier elements of the upper-class, they’ve dusted off the playbook and added some more chapters specific to a global pandemic environment. For those relatively untouched financially by the market’s wild gyrations, or perhaps who have profited obscenely by it, they’ve revived the Great Recession stealth wealth tactics of unabashed shopping. Hunkered in their urban or suburban gated-communities they usually send their personal shoppers to boutiques to pick-up and bring the designer merchandise bag in plain bags so as not to upset their “struggling” neighbors who have gone from billionaires to merely multi-millionaires and are actively downsizing their lifestyles.
So get ready to meet the stealthy wealthy – if you can find them. – because their low profile is so deep under the radar that it’s a de facto witness protection program.
The Genuinely Wealthy
The most important issue for them is always security both physical, cyber and legal:
· Deep-dive background checks, stricter protocols and restriction of movement thanks to high-tech within their residences of support staff.
· The signing of non-disclosure agreements of house staff, employees and anyone who has anything remotely to do with their business or leisure lives.
· The fortification of all their residences globally complete with luxurious panic rooms, well-equipped with provisions for those unexpectedly long-term sojourns and maximum energy self-sufficiency.
· Travel, whether chauffeured or for self-use, in non-descript, non-luxury vehicles for regular use, possibly mothballing luxury vehicles.
· Financial jurisdictional diversification particularly with increased deposits in existing off-shore accounts so they have unfettered access to cash should governments declare bank holidays or markets collapse.
The exceptionally prescient or perhaps paranoid were those handful of wealthy residents who long ago prepared a prepper plan specific to those financially well-off. They anticipated the inevitably of a market meltdown [certainly not caused by a pandemic] and were savvy enough to remain financially disciplined and highly liquid as articulated in the Financial Times Wealth Management article, Rich People Are Hoarding Cash, and Money Managers are Frustrated, 19 September 2019.
The wealthy ahead of the curve were the well-heeled foreigners who live in the US who originally came from high risk home countries notably Latin America and Asia as well as Americans overseas who have experienced such risks as government appropriations overseas. Already with this ingrained mindset, it’s simply a matter of initiating the high-level security plan with refinements.
On the flip there are others, albeit wealthy but clueless, caught with their designer pants down and perhaps still oblivious to the physical and financial dangers who are low hanging fruit and ripe targets.
For the ill-prepared and not in denial, much must be achieved during the sliver of calm before the second wave of the Covid-19 virus requiring new lockdowns and/or even more violent and widespread social unrest, broken [food] supply chains, millions still unemployed or under-employed, and newly homeless.
The Paper Tigers
There are many wealthy individuals on paper. Typically they hold a bevy of illiquid assets such as a large equity position in their own or other firms, real estate (multiple residences), private jets, high-end vehicles and art, all of which are notoriously difficult to sell during an economic implosion. They’re the living adage of “real estate rich, cash poor.” Using these illiquid assets as collateral, they’re able to maintain a veneer of extravagant or “comfortable” living but who are a minor stock market meltdown away from running out of cash and literally ending up on the street.
During the Great Recession it wasn’t uncommon for financially caged paper tigers to skip monthly common charges yet still make mortgage payments. Failure to make mortgage payments risks unquestioned eviction and becoming homeless within months. On the other hand skipping common charges requires the building’s owner to undergo the arduous and often expensive court process which rarely results in immediate eviction, rather a deal for a payment plan. In other words the condo owner can literally buy time.
Dire economic conditions give rise once again to the bogeyman better known as the repo man hired by financial institutions to reclaim their expensive toys that they can’t live without. The repo man was ubiquitous during the Great Recession and is certainly one of the few professions that thrive in recessions and depressions.
Keyser Söze Wealth | “The Millionaire Next Door”
Included in my definition of wealthy is the family with a modest-paying profession who diligently saved for decades, lived and spent far below their means, made prudent investments using the magic of compound interest. Ironically they are in a far stronger financial position than the stereotypical high-flying corporate executive who has higher fixed expenses and feels the need to spend more discretionary income to maintain appearances.
Taking from the title of the best-selling book “The Millionaire Next Door, The Surprising Secrets of America’s Wealthy” by Thomas J. Stanley, this class, who may or may not be actual millionaires, have learned generationally from the old school many of whom were in unions that had insanely fantastic benefits such as life insurance,, long-term care, dental plans, and full medical care coverage. These families have been “hiding in plain sight” for decades like the character Keyser Söze from the movie The Usual Suspects who exclaimed, “The greatest trick the devil pulled was to convince the world he didn’t exist”. If one doesn’t even know they exist, then they eliminate the possibility of being a prime target. Their true wealth is in the benefits not the paycheck.
The Faux Wealthy
The aspiring wealthy wannabes were never wealthy, merely projecting a front of a high-flying lifestyle. They proceed along an Icarus-like trajectory spending far more money than they can afford seduced by historically low interests rates and a booming stock market, which buries them perpetually in debt that leads to the inevitable crash & burn bankruptcy. They struggled to maintain an unachievable and unsustainable image by swathing themselves in the trappings of wealth in designer everything. The brutal difference is that for the genuinely wealthy, one could sell a yacht or painting at a deeply discounted price while designer clothing has almost zero value.
How does all this apply to the responsible mortals who are still in the black but far from financially secure? In an economic crisis anyone who is remotely perceived to have liquid assets will be a target for theft ranging from a silver-tongued con game or violently such as home invasions. In the eyes of the unemployed and homeless, they’re wealthy beyond all imagining for merely possessing the basics such as food without the gated community and security protection services to protect them.
In this new era expect a shocking demographic shift with the explosion of homelessness among professionals and gig workers, middle age families moving back with their aging parents who themselves are at the brink of requiring home care or nursing home care.
The Wealthy Will Play While Rome Burns
The wealthy will continue to outfit themselves in designer fashion and other accoutrements albeit far more discreet and subdued minus the labels while imposing their own social lockdown with smaller and tighter social circles and establishing a far smaller electronic social and business footprint.
Executive protection services now offer a full array of services so it’s one-stop shopping for the wealthy to insulate themselves from the barbarians knocking at the gates.
With respect to everyone else, savvy street smarts, an excellent home alarm system and a rabbit’s foot are their best protection for the coming rough times.
[Originally published 14 June 2020]
Copyright 2020 Cerulean Council LLC
The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security.