June 25, 2014

How did the rich react to the 2008 financial crisis?

Mike Dolan of Reuters finds they started hoarding massive amounts of cash:

Estimates of the amount of cash that non-financial U.S., European and Japanese companies are sitting on is as high as $5 trillion — twice the levels of 10 years ago as capital expenditure and investment has largely seized up. A pick up in mergers and acquisitions this year is modest by comparison with bloated balance sheets. [Reuters]

Dolan points to a recent survey, which shows rich investors are storing a humongous 27 percent of their portfolios in cash — a greater amount than they held in any other asset class — including stocks, bonds and real estate — and double pre-crisis levels.

Hoarded cash loses purchasing power due to inflation. But that is a price worth paying for keeping wealth in a liquid and mobile form, which cash is.

Dolan argues that fear of higher taxation due to rising inequality is what is bugging corporations and the ultra-rich. That may be one motivating factor, but a larger one seems to be that the 2008 collapse unleashed deep and lingering fears of investment in general and the stock market in particular. With bond prices having remained ultra-high for years, and with stock markets having recovered from the 2008 crisis, and now making new highs, investors — who want to buy cheap and sell expensive — just don't see much that looks cheap to buy.

This has driven some investors and firms into alternative (and bubbly) markets like gold, Bitcoin, fine art, and London, Dubai and New York real estate, but the vast bulk is just sitting as cash, waiting for better opportunities to appear. John Aziz

5:53 p.m.

History has its eyes on Sen. Kamala Harris (D-Calif.) — in more ways than one.

Former Vice President Joe Biden, the presumptive Democratic presidential nominee, announced Harris as his pick to hold the position he once held under former president Barack Obama on Tuesday.

The former California attorney general is rightly being recognized as the first Black woman to sit on a major political party's national ticket, but the historic nature of Harris' position contains multitudes.

To start, Harris is the first person with Indian heritage to run on a national presidential ticket. Her late mother was born in India, and Harris has credited her maternal grandfather, a former Indian diplomat, with helping her to appreciate the "importance of democracy and a government that represents the people — all the people,” Politico reports.

Harris's nomination also marks the first time a major nominee has graduated from an HBCU, a.k.a Historically Black Colleges and Universities. Harris graduated from Howard University in 1986, receiving her B.A. after studying political science and economics.

Howard University president Wayne A.I. Frederick released a statement saying the senator's nomination "represents a milestone opportunity for our democracy to acknowledge the leadership Black women have always exhibited, but has too often been ignored.”

Harris went on to attend the University of California, Hastings where she received her J.D., making her the first person to sit on the Democratic ticket in over 35 years who did not attend an Ivy League school.

If Harris and Biden succeed in ousting President Trump from office, Harris will also hold the honor of being the first female and the first Asian American to be elected to national office, but we'll save that conversation for another day. Marianne Dodson

5:51 p.m.

The old boss approves.

Former President Barack Obama on Tuesday said his old right hand man and the presumptive Democratic nominee, former Vice President Joe Biden, "nailed" his running mate selection. Earlier in the day, Biden tapped Sen. Kamala Harris (D-Calif.) as his running mate in the race against President Trump, and Obama said he "couldn't be more thrilled," describing Harris as "an ideal partner" for Biden.

Not only has Obama known Harris for many years, he's been an active supporter of her political career for a while. Back in 2010, when Harris was running for California attorney general, she was the only down-ballot Democrat the then-president raised funds for, Politico reported at the time. Tim O'Donnell

5:27 p.m.

There's a long way to go before California Gov. Gavin Newsom (D) has to seriously contemplate filling Sen. Kamala Harris' (D-Calif.) seat in the upper chamber. After all, the presumptive Democratic vice presidential nominee, who was selected Tuesday as former Vice President Joe Biden's running mate, will need to be part of a victory in November's general election before her Senate seat actually opens. But that hasn't stopped some speculation about who could replace her.

One of the candidates people are talking about is Harris' fellow vice presidential contender, Rep. Karen Bass (D-Calif.), who has also been touted as a potential replacement for House Speaker Nancy Pelosi (D-Calif.) one day. Bass appears to have been seriously considered for the Biden ticket, but it seems unlikely that was her last chance to move into an even more prominent role.

A few other names have been floated as possible Harris replacements, including Bass' colleagues in the House, Reps. Barbara Lee (D-Calif.) and Katie Porter (D-Calif.). Tim O'Donnell

Opinion
5:23 p.m.

Joe Biden just announced his running mate choice: Sen. Kamala Harris of California. That means Harris, if she can govern well, could be the leader of both the Democratic Party and the country through 2030. If she can't, she might well be the last democratically-elected vice president in American history.

Biden is the heavy favorite against Trump this year. Given his age and his track record of working closely with President Obama when he was vice president, Harris will presumably play a significant role in major governing decisions. It's unpopular for the media to talk about, but there's a decent chance she would need to step in before Biden's term is up. What's more, there is a reasonable chance that Biden would choose not to run for re-election in 2024. If so, Harris would be the overwhelming favorite to run in his place.

The stakes could hardly be higher. Donald Trump is blatantly trying to steal the 2020 election, and the next Republican candidate will very likely try the same trick. A Biden administration would have four years, and perhaps another four or eight under a Harris administration, to address the pandemic, rebuild the shattered economy and federal government, root out Trump's gangrenous corruption, and fortify America's democratic institutions. If Biden and Harris instead muddle through letting everything fester, as happened under the Obama administration, the next would-be authoritarian probably won't be as incompetent as Trump. Let's hope they seize the moment. Ryan Cooper

4:59 p.m.

Just moments after Sen. Kamala Harris (D-Calif.) was announced as Joe Biden's vice presidential pick, the Trump campaign jumped in to disparage her.

Dubbing her "Phony Kamala," the Trump campaign sought to paint Harris as inconsistent and shady. Most questionably, the statement condemns her as part of the "radical mob" that purportedly pushes "the left's radical manifesto." While, yes, Harris has championed several progressive causes the Trump administration would likely deem "radical socialism," among Democrats, she's considered fairly moderate.

In claiming Harris "will abandon her own morals," the Trump campaign pointed to the infamous Biden-Harris debate clash, in which Harris criticized Biden's previous stance on busing and criticized him for working with segregationists. Summer Meza

4:27 p.m.

The pick is in.

After months of anticipation, former Vice President Joe Biden, the presumptive Democratic presidential nominee, selected Sen. Kamala Harris (D-Calif.) as his running mate in the race against President Trump, his campaign announced in a text message to supporters Tuesday. Biden also tweeted the news.

Harris was long considered a favorite for the the role, and the senator wound up beating out a host of other contenders including, but not limited to, Sen. Elizabeth Warren (D-Mass.), Rep. Karen Bass (D-Calif.), Michigan Gov. Gretchen Whitmer (D), and former National Security Adviser Susan Rice, who had emerged as another top choice in recent weeks.

Biden and Harris clashed during some of the Democratic primary debates, but the two have reportedly enjoyed a good relationship before and since then.

Harris is the first Black woman and first Indian woman to appear on a major party's presidential ticket. Tim O'Donnell

3:29 p.m.

As reports indicated Monday, the Big Ten Conference is postponing all fall sports, including football, because of the coronavirus pandemic.

The league's presidents and chancellors voted on the decision Tuesday. In a statement, Big Ten commissioner Kevin Warren said "it became abundantly clear that there was too much uncertainty regarding potential medical risks to allow our student-athletes to compete this fall." The conference is reportedly hoping to move the affected sports to the spring, ESPN reports.

At least one Big Ten school was disappointed by the news. The University of Nebraska's chancellor, athletic director, and head football coach released a statement expressing a desire to find a way for their student-athletes to compete — perhaps through an agreement with another conference — arguing the university's "rigorous safety protocols" and testing procedures actually make it the safest place for them.

Elsewhere, the PAC-12 is expected to follow suit, but the ACC and SEC are still trying to play this fall, ESPN reports. Read more at ESPN. Tim O'Donnell

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