According to
Reuters, the ongoing losses in the Eurozone banking sector has lead to a total market capitalization of the top 32 Eurozone banks that is a bit less than Apple Computer.*
While all may hope for a resurgence in the value of these banks, and a stabilization of the underlying economic system that these fine corporate citizens manage for us, this is the sort of telling moment that historians will point to when they construct a narrative of how the world economic system is changing at this time.
An ongoing theme of this blog is the 'plutonomy' - a term coined in an infamous but prescient Citibank memo, authored by Chief Global Equities Strategist Ajay Kapur, which noted that most of the economic growth in developed countries world-wide was driven by the the wealthiest sector of society. The links to this memo seems to be down, and a closer look at the genesis of this idea will take several posts in any case. But the term plutonomy has received its widest celebrity from Michael Moore,
putting a spin on it as only he can.
As much fun as indulging in polemics can be, the issue of the plutonomy arises occasionally in both the left and right wing press, and often in relationship to Apple. Because Apple is so profitable and successful in capturing a high-margin share of the consumer market at prices roughly twice as high as the general competition, Apple is treated as the test case for whether theories of plutonomic domination apply to the economy as a whole, not just the financial sector. A thoughtful conservative discussion of this issue was put forth by Reihan Salam, just 15 months ago,
when Apple eclipsed Walmart's star:
The rise of Apple illustrates a number of social trends. Consider that Apple, a company that serves relatively affluent consumers and a handful of electronics-obsessed imbeciles (that's me), is now worth more than Walmart, a company that serves a far larger number of working- and middle-class Americans. Apple's success amidst the downturn, fueled by robust sales of the iPhone and more recently the iPad, is an almost perfect illustration of Plutonomics at work.
In order to update this observation, as of today, 20 August, 2011, the market capitalization of Apple is at 330 billion dollars. This is up from 220 billion dollars in May of 2010 when Apple first eclipsed WalMart. WalMart now has a market cap of 181 billion, a decline of 17%.
*As noted in the linked article, the French Banks have some restricted stock that is not included in the calculated market capitalization. So the value of the banking sector is somewhat more than the reported market cap.
Detail from Le Fils de l'Homme, Rene Magritte -- 1964. Fair use of low-resolution detail of the copyrighted image for critical purposes hereby asserted. Magritte was born in the Walloonian province of Hainaut, not that of Luxembourg. But who is behind that apple, under that bowler hat?
