The other place where I think there's been insufficient attention paid is to the excesses of those at the very top. If you look at the extension of credit, for example, in the private banking space since the financial crisis, it's extraordinary. A bank like JPMorgan has more private banking loans outstanding today than it has credit card loans. So you have a massive amount of credit that has been extended, you have an oversupply of elite product providers, service providers, whether it's luxury goods, hotels. The sense that the elite are different and will never succumb to any kind of a cycle is just mindboggling to me. And so nobody has contemplated the biggest potential losses could be among the customers that have heretofore been the safest.
[...]
The whole mindset of the financial elite was "Don't sell it, borrow against it. Because if I have to sell it, I incur an enormous tax event." And so what they've all done is to keep borrowing against it in the belief that the valuations of whatever it was were permanent. The art collection... It's masterful tax strategy, but it is completely devoid of a connection to reality.
~ Peter Atwater, June 2, 2022
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