The rich have lost 1/4 of their wealth or 10 trillion dollars. Thats more than the stimulus plans, backstops and bailouts combined ($8T).

The current issue of the economist addresses the issue of the poor rich. In other words, times are tough.

Still, I am always wary of the growing sentiment that the rich will never be as they were. I recall the same thinking was expressed during the 1990-91 recession, especially towards the high end housing market.

Cycles. One reason not to gloat is that the services the wealthy require will be scaled back. This applies to housing especially.

>There are some economists who say we might be headed back to the post-war period known as the “great compression,” when the rich weren’t so different, numerous or richer than everyone else.

>My best guess is that this will be more of a cycle, but a long one. Financial markets, leverage and asset values–the big drivers of wealth in the past decade–have dried up. Globalization, which created bigger gains for economic winners and allowed the rich to quickly and freely move their money around, is under fire from protectionist-leaning governments. And taxes for the rich are going up.

And remember productivity?

>According to one study by Robert Gordon of Northwestern University and Ian Dew-Becker of Harvard, the top 10% of earners received the vast majority of the benefits of the “productivity miracle” of 1996-2005.

Going forward, I suspect housing markets in the near term are going to be defined by the mortgages they require: conventional versus jumbo (20% down vs. 50% down). In the New York region, you can add rising unemployment and falling compensation disproportionately weighted towards high wager earners and we are clearly looking at a major restructure of supply/demand for the high end housing market.