New Bubble?

According to the World Bank data for Nepal, the Gini-index, a measure of income disparity, stood at 38 in 1996 and increased to 47 in 2004—an increase of about 24 percent. The overall income share of the richest 20% of Nepali people increased in the same time period from 46% to 54%, whereas the share decreased for all other income groups. In fact, the income share of the second richest 20% and the middle 20% dropped by 14% and 20%, respectively. It is very likely that the rich have a lower propensity to consume and would therefore save. However, due to the risk of inflation, these individuals would look elsewhere for saving rather than at a typical savings account—a well performing real-estate market was a perfect store of value. As the residential real estate market pulled back in recent years, is the money moving towards commercial real estate? Here is an article (CLICK HERE) from MyRepublica on the rise of commercial complex construction . Is a new bubble on the way? Is it the end of the "Kirana Pasal" concept that gives Kathmandu its unique identity?

"I Dream of Gini"

According to the World Bank data for Nepal, the Gini-index, a measure of income disparity, stood at 38 in 1996 and increased to 47 in 2004—an increase of about 24 percent (INTERACTIVE GRAPH HERE). Joseph Stiglitz argued in his post on Real Clear Politics (CLICK HERE) that the "growing inequality in most countries of the world has meant that money has gone from those who would spend it to those who are so well off that, try as they might, they can't spend it all." This will then lead them to make risky ‘investments,’ which may fuel asset prices, giving rise to  bubbles.

Does this answer the recent real estate and banking volatility in (Kathmandu) Nepal?