From the WSJ's Wealth Report blog:
Here’s more proof that the age of High-Beta Wealth is going global.
An article in the Times of London notes that the business of pawning for the rich is exploding in London.
“Bankers whose bonuses have not materialized, entrepreneurs suffering temporary lulls in cash flow and other formerly wealthy individuals are seeking respite at the pawnshop, more typically the refuge of the destitute,” the article states.
Apparently, the business of pawning Ferraris, fine art, Rolexes and and Cartier jewels has never been better. A pawn business called borro is sending tow trucks to posh enclaves like Kensington, Chelsea and Fulham to pick up an ever growing list of Porsches and BMW’s.
He said that the the volume of clients has more than doubled and the average size of loan has tripled. Clients can borrow up to $1.5 million as long as they have good credit, but the interest rates on the biggest loans can top 60%.
Why would the rich pay such rates?
Just as we’ve seen in the U.S., today’s rich are increasingly reliant on financial markets and therefore more prone to sudden income shocks that can leave them short of cash. Sometimes those shortages are temporary. Sometimes they signal long-term collapse. Either way, the over-leveraged, over-spending High-Betas continued to fuel a rise in high-end repo men and pawn shops to the wealthy....MORE