Executives become uber drivers: ‘easy come is easy gone’

High beta richFor anyone that has not yet read Robert Frank’s important book “The high beta rich”, now is another great time to do so.  It is critical to understand how a focus on inflating asset prices at all costs has worked to undermine financial stability, our economy, government revenues and long term investment prospects.  It also helps to explain why political upheaval is spreading around the world.  While people often assume that the “1%” are financially stable, the truth is that ‘easy come’ income is often wasted on elaborate expenditures and mal-investment, leaving them with massive debts and little savings when asset bubbles collapse. And they always do collapse in the end.

This story about Houston is a classic example see,  Mansion sales and discount dining: oil rout hits Houston rich:

The unfinished home of former oil executive Kolja Rockov is seen at 12 Crestwood Drive in Houston, Texas February 18, 2016. REUTERS/Terry Wade

The unfinished home of former oil executive Kolja Rockov is seen at 12 Crestwood Drive in Houston, Texas February 18, 2016. REUTERS/Terry Wade

Twenty months into the worst oil price crash since the 1980s, well-heeled residents of the world’s oil capital are among the hardest hit largely because tanking energy firm shares make up much of oil and gas executives’ compensation.

…To be sure, oil executives are not alone in feeling the pain. Many blue collar jobs in oilfield equipment production have disappeared. So have thousands of middle management jobs in oil exploration and production. A regular Uber customer is likely at some point to ride with a former energy industry professional.

“It pays for the mortgage,” said Matthew Clemonds, who once did mapping for pipeline companies and now works for the ride-sharing company.

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