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— The rich get richer and the poor get poorer. To a large extent, that's what's fueling the current buyout-driven stock market upthrust. The richest 1 percent account for almost 20 percent of household income and 35 percent of wealth -- bringing the nation's rich/poor divide back to the levels of robber baron days. This flood of money pours into hedge funds and private equity groups, whose buying fuels the stock market, even as the economy softens. When stocks rise, the plutocracy benefits the most: that upper 1 percent owns one-third of all stocks, and the upper 20 percent controls nine-tenths of outstanding shares.

There's a gaping have/have-not gap in San Diego, but it's probably not as wide as the national chasm, for a couple of unusual reasons: (1) The huge rise in housing prices beginning in 2003, one of the nation's wildest, helped the bottom 80 percent, and (2) The weak market in technology stocks, which dominate San Diego, walloped the aristocrats.

Edward Wolff, professor of economics at New York University, is one of the ranking experts on wealth and income inequality. He says, "If stock prices increase more quickly than housing prices, then the share of wealth owned by the richest households goes up." But the little folks do better if housing prices are going up faster than stock prices. San Diego's median home prices have doubled in this decade, from $269,000 to $550,000. During this period, the stock market plunged, then partly recovered, but overall, tech and biotech stocks are still well down from their highs before the bubble burst in 2000.

The bottom 80 percent got another boost: the biggest housing-price inflation has been in the lower-priced homes -- those run-down 1000-square-foot cottages going for $400,000. The housing bubble is finally leaking, and the weakest segment of the market is in the higher-priced homes. So relative wealth of San Diego's bottom 80 percent has probably inched up, although wealth is defined as the value of what you own less what you owe. Many people who own these lower-priced homes are loaded with debt. With prices no longer appreciating and mortgage refinancing coming to a halt, many of them are in trouble. Still, on balance, the housing bubble boosted middle-income folks a bit more than it boosted the upper crust, although the housing shakeout has a long way to go, and this may change.

Then there is the stock market. San Diego stocks are overwhelmingly on the Nasdaq, a computerized system that is concentrated heavily in techs. In the bear market beginning in 2000, Nasdaq stocks plummeted 80 percent. They are still only halfway back to where they peaked. Here are some pre-bear market highs followed by current prices of some San Diego stocks: Sequenom, $573.75/$4.00; Nanogen, $101.94/$1.50; Diversa, $169.19/$7.00; Wireless Facilities, $163.54/$1.60; Ligand Pharmaceuticals, $26.50/$6.90; Isis Pharmaceuticals, $39.00/$10.00; and even San Diego's most successful company, Qualcomm, $100.00/$46.00.

This does not mean that the founders, chief executives, and venture capitalists are living in penury; they paid pennies per share for their stock. It just means that their paper wealth has receded, unless they jettisoned their shares before the feces hit the fan, as John Moores did at fraud-plagued Peregrine Systems. But executives who got shares through stock options or direct purchases could be hurting. Ditto for San Diegans who bought local stocks in the bubble days.

If stocks come roaring back and the housing bubble bursts instead of leaking, then San Diego's wealth and income distribution will be no different from the nation's: disgustingly lopsided.

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