Pity the poor rich! Pity the poor! Pity us all!

Here at The Daily Reckoning, we always take the part of the humble…the despised…the oppressed…and the misbegotten.

Today, that means the rich…

Yes, dear reader, the rich are getting beaten up. Maligned. Mistreated.

Their governments all have in it for them…taxes on ‘the rich’ are rising. The Democrats are talking about financing the entire nation’s health care system on the backs of the super-rich.

And prosecutors and politicians are targeting their salaries. No more million-dollar paydays…not with the feds looking over their shoulders. Oh…and their investment earnings are down too. The dividend yield on the stock market is scarcely 3% – try living on that, you rentiers! As for the 10-year T-note, the yield is only 3.5%.

And capital gains? Fugetaboutit. Stocks have been rallying (bouncing) since March 9th. The bounce has helped investors recover about 45% of what they lost. But, overall, there have been no gains in the stock market for more than 10 years. None. Factor in the effect of inflation and the story is worse; investors have lost about 25% to 30% of their money.

But everyone is pointing a finger at the rich – as if they were to blame for the financial debacle of the last few years. Some economists even blame the “growing inequality of incomes” as a cause of the crisis.

This is completely unfair. The rich didn’t cause the problem – they merely took advantage of it as best they could. It was a time when ‘financialization’ was on the rise…when money made money, at least in theory. Speculation and lending paid off. Obviously, you have to have money if you’re going to lend or speculate. Some of ‘the rich’ – those in the financial industry – cleaned up.

But come the revolution of ’07-’08 and the rich lost their heads. Who lost $50 trillion in stock and real estate? It wasn’t the poor. Whose derivative positions went belly up? Whose stocks went down? Whose mega McMansions got re-priced as cracker shacks?

On this last point, we have new information. The housing crisis may have begun in the subprime trailer part of town. But now it’s in the older suburbs – it’s the prime and super-prime homeowner whose back is to the garden wall. A third of foreclosures in the 2nd quarter were of houses financed by prime, fixed-rate mortgages. Of prime borrowers, 41% are expected to be underwater by 2011, says a forecast from Deutsche Bank – nearly three times as many as at the beginning of 2009.

And now nearly half of all jumbo mortgages are underwater. Yikes, the rich…and bourgeois classes…are up to their necks.

And now this sad report from The New York Times:

“Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent, according to CapGemini and Merrill Lynch Wealth Management. Monthly income from stock dividends, which is concentrated among the affluent, has fallen more than 20 percent since last summer, the biggest such decline since the government began keeping records in 1959.

“Some of the clearest signs of the reversal of fortunes can be found in data on spending by the wealthy. An index that tracks the price of art, the Mei Moses index, has dropped 32 percent in the last six months. The New York Yankees failed to sell many of the most expensive tickets in their new stadium and had to drop the price . In one ZIP code in Vail, Colo., only five homes sold for more than $2 million in the first half of this year, down from 34 in the first half of 2007, according to MDA Dataquick. In Bronxville, an affluent New York suburb, the decline was to two, from 17, according to Coldwell Banker Residential Brokerage.”

(More on this in today’s guest essay, below…)

And so, we pause to wonder. What does it mean? Where does it lead? Who gives a flying fig?

At a certain level, all of this concern about who earns what…and who has what…is just so much envious claptrap. For most of us – who have enough to eat and a roof over our heads – money is just sport. We aim to win, just as we would try to win a croquet match. But what difference does it make?

We don’t know. So we turn back to the game. How can we get more wealth than our neighbors?

And here…a bit of perspective…

When the Great Khans road across the heartland of Eurasia in the 13th and 14th centuries, nothing could stop them…or so it seemed. Their soldiers were practically born in the saddle. From childhood they learned how to ride, and fight…and little else. Europe’s population, meanwhile, was more settled…and more soft.

But Europe was hardly the brightest bauble on the tree. The Mongols had their pick. West – to conquer Europe. South – to conquer India. Or East – to conquer China.

They attacked Europe, but only half-heartedly. Instead, they devoted most of their efforts to India and China. Why? India and China were richer! There was more stuff to steal.

It’s hard to make comparisons. But, at the time, the East was at least as rich as the West. But then, along came the Industrial Revolution and the East was left behind. People in the West learned to save…and to invest their savings in capital improvements – machines, factories, canals, railroads, mines, ships and all the other things that allow people to be more productive. This extra production made them rich. Not to put too fine a point on it, but they could make more stuff!

Then, with the ability to produce more and better stuff came the ability to produce the kind of stuff that you can kill people with. So, pretty soon, they were making machine guns. And pretty soon, the horse-mounted warrior of the steppes was as archaic and irrelevant as the Roman legions. He could still charge with great élan. He could still raise his saber and his bow…providing a rich subject for artists and poets. And he could die so well! All you had to do was to open up with your new, factory-made 50-caliber machine gun and down he went.

But what goes around comes around. Who’s saving now? The Chinese save 25% of their earnings. In America, the rate is rising…from zero to five percent!

Who’s building factories? Who’s harnessing the industrial revolution? Who’s getting rich? Who’s innovating? Who’s building cities?

Who’s the world’s biggest creditor? Who’s got the biggest pile of money?

Oh, dear reader…you already know the answer…

“West will languish; Asia will lead…” says a headline in Barron’s this week.

And what’s this?

“China commercial property sales higher than US,” says a headline at Bloomberg.

Yes, dear reader…it is the way of the world… Losers become winners. Winners become losers. Day yields to night; summer gives way to winter. Life goes on…always as it always was…but never the same.

And we leave you with that philosophical reflection…and go back to the financial world…

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.