World’s Rich Are Hording $10 Trillion in Cash

[Octafish]

News from the Have-Mores:

World’s Rich Are Hording $10 Trillion in Cash

By Robert Frank
WSJ Blogs
The Wealth Report - Robert Frank looks at the lives and culture of the wealthy.
July 13, 2010, 10:27 AM ET.

How afraid are the wealthy right now?

According to a report from Scorpio Partnership, the world’s high-net-worth investors (with $1 million or more) have an extra $10 trillion lying around that they refuse to turn over to their wealth managers.

Granted, these investors have $16.5 trillion invested with private banks and wealth-management firms–up from $14.5 trillion at the end of 2008, largely reflecting market gains.

But Scorpio, a London consulting firm, says wealthy investors actually have more than $26 trillion that they could be giving the banks and wealth-management firms to manage. “This implies there is approximately $10 trillion of high-net-worth assets that could be advised by banks,” the firm says. “Capturing these assets is the real answer for industry recovery.”

That could take a while. The wealthy were burned so badly in the past three years from bad advice and bad investment decisions that they are unlikely to hand over their extra cash anytime soon. And can you blame them?

CONTINUED...

http://blogs.wsj.com/wealth/2010/07/13/worlds-rich-are-hording-10-trillion-in-cash/

I can't blame them for anything. I hold them guilty.

[Rex]

1. They must have hit the Trifecta!

GUILTY.

[Octafish]

20. And the warmonger kept on repeating it.

Starting in August, 2001.

June 19, 2002

Bush's "Lucky me, I hit the Trifecta" joke

Please give us a break

In his political speeches, Bush has been compulsively repeating his tasteless joke about "Lucky me, I hit the trifecta" because the 9-11 attacks gave him the justification he wanted to raid the Social Security fund. It's almost too weird to even contemplate. Can he not see that he is joking insensitively about how the WTC-Pentagon attacks enabled him to justify yanking out money paid in by working people for their retirement and giving it to his buddies in the defense industry? Characterizing it as a "win" for himself is venal. How do the families of those killed in the attacks feel about that? How can any American look upon this man as a "leader"?

An editorial in The New Republic points out that there is no record of him ever saying that he would not break into the Social Security fund "except in case of war or recession..." until August of 2001. It had always been a straight promise with no conditions that he would never do it. How strange is it that a few weeks before the attacks he suddenly started setting up a condition for breaking his promise not to dig into the Social Security fund, and his condition just happened to be fulfilled by the attacks.

These were attacks he had warnings about, personally, and failed to take even minimal precautions against. Is there really any mystery about all this? What smoking gun are we waiting for? What has the guy done right?

SOURCE:

http://www.davidcogswell.com/MediaRoulette/TrifectaJoke.html

Same old same old. War. War. War.

You've probably seen this, Rex: the story of the bag man:

Know your BFEE: Phil Gramm, the Meyer Lansky of the War Party, Set-Up the Biggest Bank Heist Ever.

[Rex]

32. Yes, I grew up in Houston and Phil Gramm was considered a Texas business genius.

I would hear adults praise the man when I was a kid, may he rot in Hell. Delay and Armey are two others as I was growing up and that I learned to despise. Some of the biggest CROOKS ever to come out of Texas IMO.

[theaocp]

2. Not sending out your money

will only leave others to starve. When people starve, they do drastic things. And this is the entire world. Oops.

[Octafish]

24. That's why ''Offshoring'' is supposed to be illegal.

Lucy Komisar explains in a Q&A with Bob Roach, US Senate Investigator.

These are the days of Kleptocracy. These treasonous greedheads will never understand Justice Oliver Wendell Holmes' philosophy: "Taxes are the price we pay for a civilized society."

Most important: A hearty welcome to DU, theaocp. Tell me about the new corporate feudalism! I'm in Detroit.

[Hannah Bell]

3. Definitions of capital strike on the Web:

•Capital strike refers to the withholding of new investment in an economy. A capital strike can occur when banks decide to raise lending standards or minimum loan requirements to individuals and business entities, and decide to sit on cash reserves, rather than take many loan risks, until a later ...

en.wikipedia.org/wiki/Capital_strike

[Greyhound]

9. And this administration did nothing to prevent it, even as they were explicitly told

that this would be the result of their scheme.

[Hannah Bell]

22. yes. so one can surmise that the long depression = a somewhat deliberate effort to suck

the savings of the working class into the pockets of capital.

[Greyhound]

29. And we mustn't forget the second half of the reason for instituting this system.

As the essential reason for this system's existence, the boom-bust cycle is built in. Those for whom it is designed, the rich, take more money than others during the boom, building large reserves that are extracted from the total pool. The rich get richer.

But it is the bust that really pays out. This part of the cycle is induced by the above and so is inevitable. When the bust occurs, the house loses proportional value, but still holds far more than the suckers. As the bust progresses, the price of real assets fall and those still holding currency are able to convert their 'chips' into more of those real assets, and in doing so are in an even better position for the next boom.

Over the long term, you can't beat a rigged game except by refusing to play.

[fasttense]

4. Well since the inheritance tax goes back into affect next year here in the US

Rich children awaiting their inheritance should encourage their parents to die this year instead of later. Talk about unintended consequences, this gives every rich brat a motive to kill off their parents.

Make those parents cough up those hidden trillions and pass it on to their waiting off spring now while they don't have to pay taxes on it.

[Octafish]

28. Certainly would speed the thought processes of the shallow minded and hard-hearted.

Which of course is the typical profile of the conservative.

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness." -- John Kenneth Galbraith

These unintended consequences would make for a great movie. I got a couple in the hamper, but once they're out the door...

[dipsydoodle]

5. It's hardly likely

to be in shoe boxes so must be invested somewhere or other.

[Greyhound]

12. I think you need to learn the difference between investing and depositing.

The $$ is parked, and yes it is "earning" interest it is serving no purpose other than to falsify balance sheets.

[unblock]

26. deposits falsify balance sheets?

that's a new one on me....

[dipsydoodle]

31. New one on me too.

.

[Greyhound]

33. Why do you imagine that the banksters have "recovered" so well and so quickly?

Between the massive transfusion of pretend money, and allowing accounting changes that were, and still should be, unlawful, the illusion of prosperity is created and it's back to stealing as usual.

The loans are still not going to be collected, the bets are still wrong, and reality still is. Only the set has changed.

[unblock]

38. ah, so you mean the deposits provide legitimate cover for the false activity of banks?

the deposits themselves are not the problem, which was not at all clear from your previous post.

[JDPriestly]

35. But, I think these millionaires are doing the wise thing in hiding their assets.

As long as corporations are run irresponsibly, even dishonestly, as long as they are falsifying balance sheets and cutting corners (as BP has done), I would not, if I were wealthy, want to entrust all of my money to them.

The financial reform act does nothing to encourage confidence in the regulation or business and accounting practices of big business -- nothing.

The right-wing pundits talk about lowering tax rates to stimulate business investment. But, lowering tax rates is not the problem. We need laws, regulations, business practices that assure investors that their money will not be gambled away, stolen or just wasted.

I reviewed the course requirements for an MBA from a major American university. To my shock there was no course entitled business ethics. Lawyers, in contrast, have to take courses in professional ethics (at least in California). Not only do we take a course in professional ethics but we have to pass an ethics examination. What is more, when we join the Bar Association, we are fingerprinted and required to submit detailed information on the history of our lives -- and I have personally known people who flunked the "character test" or at least had to surmount special hurdles to pass it.

The business community needs to improve its ethical standards. It doesn't need, necessarily, to be as strict as the legal profession. But there should be some kind of measure, some kind of self-regulation within the business community about ethical standards for business leaders.

Accountants and money managers have ethical standards. But I don't think that MBAs do.

As long as an individual is risking his or her own money, that person's ethics, as long as he or she is acting within the law, are perhaps no one's business. But a person who accepts investments from others or who partners with others should be be required to conform to certain ethical standards in my opinion.

It should not be just a matter of government regulation. MBAs are professional people, and they should publish and enforce ethical standards within their profession.

[glitch]

36. Restoring confidence should have been job one.

The only way to do that was real financial reform and executing existing laws and indicting criminals. "Looking forward" happened instead, no doubt because that was the only way to get into office.

[county worker]

6. Don't worry wealthy people, keep you $10 trillion out of the market we will be giving Wall Street

our Social Security money to play with instead. Of course it won't be Social Security anymore. It will be social insecurity when all is said and done.

[SammyWinstonJack]

37. Our SS money has already been handed out to Wall Str. through tax cuts for the rich bastards and

two wars.

[neverforget]

7. Sounds like they need a tax cut!

:sarcasm:

[jgraz]

8. I'm sure discouragement of cash hoarding will be top on the IMF's list of austerity measures.

:eyes:

[TwilightGardener]

10. Where's that trickle when ya need it?

[LiberalEsto]

18. Oh, there's a trickle all right

It's the rich pissing on us.

[lpbk2713]

11. I wonder if that figure includes ...

... the pallet loads of $100 bills that 'disappeared' from the Baghdad airport?

Was it $400 Million or so? I always suspected BushCo really knew where it went.

[Greyhound]

13. Almost $9B.

The $400M figure was only one shipment that disappeared.

[lpbk2713]

19. Just a small portion of that figure ...

would be enough to cover the purchase of Smirky's land grab in Paraguay.

[Newest Reality]

14. More tax breaks will do the trick, ey?

This is some news, especially when you try to wrap your head around what is a small word -- trillion -- and grasp just how much ONE trillion is, let alone ten.

And the rest of the world descends into squalor, deprivation and misery. How nice of those who horde :(

Them that has, gets, the old saying went.

[Tierra_y_Libertad]

15. The downtrodden wealthy will rise against their poverty stricken owners!

Oh, wait, they already have and won.

[izquierdista]

16. Capturing these assets

Be vewwy quiet! I'm wooking for investment opportunities!

[walldude]

"Cash"?

Not possible. There isn't that much "cash" in circulation...

Maybe on paper but they aren't hoarding actual cash...

[DemReadingDU]

39. Exactly. There is only $829 billion in cash

As of December 2007, currency in circulation—that is, U.S. coins and paper currency in the hands of the public—totaled about $829 billion dollars. The amount of cash in circulation has risen rapidly in recent decades and much of the increase has been caused by demand from abroad. The Federal Reserve estimates that the majority of the cash in circulation today is outside the United States.
http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html


Perhaps, some of these people are hoarding Swiss currency? Euros? Gold?
But they certainly are not holding $10 trillion is U.S. currency.

[walldude]

17. "Cash"?

Not possible. There isn't that much "cash" in circulation...

Maybe on paper but they aren't hoarding actual cash...

[Greyhound]

21. Yes, it's not actual cash. Cash is used to identify non-working liquidity. n/t

[taught_me_patience]

23. Fundamental priciple of finance

If the cost of capital is higher than the return on that capital, then investment (growth) DESTROYS wealth. High levels of cash signal that investors feel deflation is likely in the future.

[unblock]

25. they're not "hoarding" it. they're simply not letting a bank's high-net-worth group manage it

most likely, they're simply managing it themselves, or going through a bank that doesn't have a high-net-worth department.

they're only "hoarding" it from the perspective of the high-net-worth groups, who want to get their claws on every last dollar available.

[JHB]

30. Good point. This IS a WSJ article/post...

...bit of a vested interest there in collecting fees for "managing" it. Kinda like they way they view Social Security.

[Initech]

27. Maybe they should be featured on that show Hoarders.

[Octafish]

34. Got the theme: David Crosby's ''What Are Their Names?''

What Are Their Names?

I wonder who they are
The men who really run this land
And I wonder why they run it
With such a thoughtless hand

What are their names
And on what streets do they live

I'd like to ride right over
This afternoon and give
Them a piece of my mind
About peace for mankind

Peace is not an awful lot to ask

-- David Crosby

From his great album, "If I Could Only Remember My Name"

Just want to talk to them and let them know they can't get away with thievery through legislation. Funny, it used to be the government's job.

[tomp]

40. ten trillion in savings and complaining about bad financial advice?

what am i missing here?

[TBF]

41. Of course they are -

they saw what Wall Street did to all of our 401Ks.

[Blue Owl]

42. The Have More's

The very douchebags GWB wrecked our country for.

:mad:

[AzDar]

43. K & R

:kick: