USA: The perpetual Bourgeoisie!

October 21, 2025

Karl Marx, whose theories led to the creation of Marxism, believed that the Bourgeoisie is the capitalist class that owns the means of production and benefits from the labour of the proletariat, the working class. The Bourgeoisie were a new breed of wealth creators against the backdrop of the diminishing Aristocracy and Monarchy. America of today, which we perpetually refer to as the US, was a formation of a country composed of immigrants mostly from Europe and Africa. France then ruled by the Valois dynasty and later by the Bourbons, did control vast territories in North America between 1534 and 1763 A.D. The British then chucked out the French and started governing America until they were defeated by the Continental army led by George Washington in 1781. The surrendering British army was led by Lord Cornwallis who would then go on to defeat Tipu Sultan in the third Anglo Mysore war. 


Picture only for representation purpose

So, finally with all the slaying of colonial imperialism, the US under the new format embarked on a process of stabilising and developing the newly formed state. Infrastructure was given impetus, Banks were established, shift from agriculture to industrialisation began and eventually manufacturing became the backbone. And guess what? it had imposed tariffs to protect its nascent manufacturing hubs even in the early 1800s! The US eventually turned out to be an Industrial powerhouse with excellent railroads, robust Banking system, connectivity boosted by canals, booming steel & oil industries. The US GDP grew consistently during the 19th century and it emerged as the largest economy by 1890.

Its journey of transformation became a role model for the other emerging economies. The US encouraged private ownership, entrepreneurship, free market control, minimal Government interference, encouraging competition and became the champions of Capitalism. You did not have to be born rich to become wealthy, nor did you have to get a rich father-in-law to be part of the bold and rich, instead you could create wealth with your ideas, with your solutions under this new era of Capitalism. The monarchs of Europe began to look like commoners in terms of their wealth in comparison to the successful entrepreneurs of the US. John D. Rockefeller’s net worth was higher than the combined wealth of many European monarchs including that of King George V of the U.K. and the Kaiser of Germany. Btw, Kaiser was the re-embodiment of Caesar and so was the Tsar for Russia. Henry Ford’s net worth surpassed the GDP of Spain, the original colonisers of America. European monarchs were ruling with their divine inherited right whereas American entrepreneurs were creating wealth through the equity markets.

This dominance continued across the 20th century and now has found its new peak in the 21st century. American equity markets today command a massive share in the global equity markets with a share of 48.6%. it stands at a whopping 62.8 trillion USD which is roughly four times the size of the entire Euro zone’s GDP. Nvidia, the top US company in terms of market capitalisation has a market cap higher than the GDP of India. This looks like an enviable position for any aspirant. Well, let me recall the devil for the details. When we dissect the US market, it’s appalling to know that the top five companies have a share of close to 30% of the total US market capitalisation. A single sector, IT, has a share of 30% in the S&P 500 index. And the new found gold, AI is estimated to have a gigantic share of 44% of the S&P 500 with just 30 AI related companies.

What we are witnessing today is a huge country allocation risk and a mad rush for AI related stocks in the same country. The US is also notorious for being the largest borrower with an outstanding Federal debt of 37.64 trillion USD of which 9.2 trillion USD is up for refinancing in 2025. The US government is experiencing a Federal shutdown which began on October 1st and has developed to be the third longest in its history and still batting! And if I were to believe Gita Gopinath, the former chief economist at the IMF, she sees a global wealth erosion of 35 trillion USD triggered by a crash in the US equities. And when the US sneezes, the World catches a cold. 


Picture only for representation purpose

When it comes to global economic and financial meltdowns, the seeds have also been sown by the US. If the Panic of 1873 triggered worldwide recession, the Panic of 1907 led to the collapse of the European Banks. The Great depression of 1929 lived up to its predecessors and led to mass employment and bank failures across Europe, Latin America & Asia. The notorious Black Friday of 1987 where the Dow Jones corrected by 22% on a single day, the financial markets across Europe, Asia & Australia trembled. The Japanese market, Nikkei, altered by 14.90% on a single day and the Hang Sang by 33% over a weeks’ time. Later on, the analysts attributed the Black Friday to high valuations after a long bull phase & rising interest rates. The Devil is asking right now, how different is the situation today?

The Global Financial Crisis (GFC) of 2008, prompted by the looming subprime crisis from the heart of the US, led to collapse of coveted Banks like Lehman Brothers, Washington Mutual among a host of others. The Indian Sensex was down by 59% from its peak thanks to the GFC. This is when India probably had the best of its share on macros, where the GDP was at 9.3%, fiscal deficit within 2.5% and the current account deficit less than 1%. This was the era where the US commanded a market share of 33% of the world’s market capitalisation and today being closer to 50%. Not only have the US households channelled their savings into the US equities but so have the Europeans, encouraged by the strong and handsome returns from the tech industry, aka AI. Gita Gopinath cannot be ignored given the compelling facts and situation.

The US has also been infamous for its involvement in global politics to financial meltdowns to authoring regime changes at its whims and fancies. Its entanglement in World War II was because of its own provocation against the Japanese by freezing its oil exports to Japan. Japan just walked into the trap set at Pearl Harbor. Before officially joining the war, it was already funding the Allied forces with military and financial aid, in spite of declaring itself neutral. Its involvement in the Korean war in the pretext of fighting against the communists is well documented. However, it did suffer a humiliating defeat at Vietnam where it had ventured out on a similar mission. The Gulf war against Saddam Hussein, the Afghan occupation to nab Osama Bin Laden, the campaign to eliminate Gaddafi are still fresh in our memories. And it is fascinating to know that Sadam, Osama were once apprentices trained under the US banner, of course for their own selfish endeavours. Sadam for Iran and Osama for the Soviets, both bitter enemies of the US. Henry Kissinger, the former Secretary of the state, had himself quoted, “Being America’s enemy is dangerous; being its friend is Fatal!

The US today is living up to the reputation of an eternal bully now with imposing tariffs and threatening to get the World’s economy on its knees. There is a general consensus that America thrives when the rest of the World struggles. You may like or hate the current US President, but you definitely cannot ignore him. If his predecessor, Joe Biden was reputed for forgetting things, Donald Trump is a genius in stating things that never occurred. That is the power of the seat of whoever occupies it, the US Presidency. The US is not only bullying the rest of the World with its consumption might, but also ignoring the UN, an organisation which is headquartered on its own soil. It is the perfect Bourgeoisie that Karl Marx professed.

Well, what does it mean to an Indian investor who is more concerned either on getting his next meal or for a seasoned investor to identify the next trend. For someone who is busy with his own profession, kindly seek the services of a seasoned advisor, one who is frank enough to discuss the risks involved and not just brag about the glamour of equities. Just like you queue up to the most experienced cardiologist when you have a heart ailment, one needs to chase experience and quality of advice when it comes to investing their own hard-earned money. For the inexperienced DIY (Do it yourself) cadre, please be reminded of the proverb Penny wise, Pound foolish.

Given the current rally on the US equities, its dominance and also its concentration on just tech related companies, yes, we do have a reason to expect a correction. If it does happen, we in India will also be affected. Panic selling can occur just like it happened in 2008 in spite of India sailing at an GDP at 9.5% plus. But when the dust settles, the macros will be valued. India today is not only the fastest growing economy but also a superpower in the making. If India has been slapped with higher tariffs, just be reassured, someone cannot tolerate the rise of the next Bourgeoisie. India is also to a great extent insulated from the global geopolitical tensions as its economy is based on domestic consumption and now with domestic inflows into equities. Who ever imagined that the burgeoning population would one day turn out to be a boon.

If someone is perturbed by the probable crash, please be reminded that you invested in equities with a long-term horizon and not just to make a quick buck. Always maintain a healthy asset allocation strategy based on good advice. Sit back, enjoy your weekends and make the best of what is on offer, work hard, leave the rest to time.

 

 

 

 

By David Pinto Prabhu
David Pinto Prabhu, currently a partner at Fisdom Private Wealth, is on a mission to simplify the clutter surrounding the dynamic nature of investments. He has over 20 years of experience in the field of investments. After starting his career with ING Investment Management (2004), he moved to J P Morgan Asset Management (2008), and was heading South India for its institutional business. He holds a PGDM degree from St Joseph’s College of Business Administration, Bengaluru, and a BCom degree from St Aloysius College, Mangaluru, where he is currently based. David can be contacted on LinkedIn: linkedin.com/in/david-pinto-29037a33 and Email: davidcasmir@gmail.com.
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Comment on this article

  • Carol, Mangalore

    Tue, Oct 21 2025

    Good read David! 👌

  • Nicholas, Mangalore

    Tue, Oct 21 2025

    Informative 👍


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