Notice how the rich are getting richer? When energy giant Encana this week punted 20% of its employees, workers gasped and investors cheered. The stock went up. People who owned it made money – which was exactly the point. The guys who run Encana were, as they say on Bay Street, ‘adding shareholder value.’

Moral: working is harder than investing.

In the next few days expect a lot of numbers showing the US economy is growing measurably (but not seriously) weaker. Job creation’s expected to fall. The impact of the 16-day government shutdown on consumer spending and mortgage applications has already been negative. It’s even likely to be a lousy Christmas.

But at the same time over 70% of the biggest US companies now reporting third-quarter profits have exceeded analysts’ expectations. Profits, in fact, are expected to surge 4% in the final three months of the year, which is more than impressive.

Why? Easy. A struggling economy brings sustained low interest rates and cheap corporate loans. Besides, companies are getting more ‘productive’, which means they’re busy replacing expensive employees with network architecture. More money falls to the bottom line. Bigger profits. Higher stock.

In fact, the result of this growing chasm between the economy and investors is dramatic. So far this year the Dow is up 22.7% while the S&P 500 has gained 26.4%. Even the laggard TSX in Toronto has now swollen by 10.45% since January, despite a recent dive in the price of oil and a 30% dump in the value of gold.

Of course, not everyone likes to load up on stocks and hope for the best, which is why a balanced and diversified portfolio makes sense. For example, if you had 60% exposure to growth assets (Canadian, US and international stocks, as well as REITs, all owned through diversified ETFs) and 40% safe stuff (various bonds and preferreds) you’re ahead about 9% this year. That portfolio of course has far less volatility to it, and is performing well despite a mid-summer slump for assets that were hit by rising interest rates (like those REITs).

The point is this: After Rogers Communications announced layoffs this week (who needs journalists when you have blogs?), the stock went up. Duh.

A lousy economy even has the Bank of Canada throwing in the towel. Its latest tablet from the mount dropped a long-standing reference to the next interest rate move being up. What the new boss there isn’t worried about any more is inflation and a too-high dollar. Now he’s sweating over the ‘output gap’ as factories gear down, along with a limping loonie and the spectre of deflation.

The central bankers also worry about condos. And mortgages. And the fact house sales in Toronto were 15% higher last month than the year before. The same cheap money that’s goosed corporate profits and bloated the portfolios of the wealthy has sucked the masses into a debt vortex. As an inestimable number of boring articles on this pathetic blog have documented, most people don’t have much of a retirement pot to pee in these days. Savings have withered as more net worth migrates into real estate. Half the people within a few years of retirement freely admit they’ll probably run out of money, while cheapo interest rates have raped and pillaged the yield on our fav national asset, the beaver-certified GIC.

As mentioned here yesterday, Boomers are encouraging a new generation of housoholics, and we know that half of the people with TFSAs have no funds there, and 80% of the rest have resorted to savings accounts. In short, it’s no wonder money’s flowing up the food chain to the folks with liquid portfolios, while debt is trickling down to enslave the rest. That may be a tad simplistic, but nobody’s house is increasing at 9% annually any more, nor will that be happening again (if it ever did).

The masses love real estate because they have to live somewhere, houses can be bought with extreme leverage, and your mom made money owning one. Most folks have no idea what a REIT or an ETF is, nor where to get one. But everyone has a comatose savings account and a mortgage. Millions of us shovel billions into bank GICs paying 1% when the same bank’s preferreds pay 5.1% with a dividend tax credit boosting it past six per cent. As I have said here in the past, the world is dividing. Wealthy people own assets. The rest hold debt.

Soon this could be the most divisive feature of our society. Choose your side with care.