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There is a lot, $15+ trillion USD, of cash sitting in bonds/treasuries/etc around the world. Interest rates around the world are low if not negative plus many t
by charwalker 7y ago
There is a lot, $15+ trillion USD, of cash sitting in bonds/treasuries/etc around the world. Interest rates around the world are low if not negative plus many treasuries are hitting low if not negative rates meaning the groups or people sitting on these piles of cash look to invest in riskier VC/stocks/etc for a positive return.
This money is ripe for investing in active funds or financial management groups. The leader of SoftBank approached the Saudis years back and, allegedly, got a $45 billion buy in from a 45 minute meeting. That's a lot of cash on hand. The amount of cash sitting around has stuffed typical investment opportunities and led to (relatively) incredibly risky investing or active management like SoftBank/WeWork. It's mostly worked out for VC funds as if group A doesn't buy in for billions, group B and C are available for a meeting next week losing Group A the opportunity. And Group A has enough cash that they could lose the investment and recover via less risky investment opportunities give say 1 in 10 investments pays out 20-50x.
It's great if you are, say, an ex WeWork CEO who can take advantage of the free money. You might even be paid in negative interest to take it on. It's a bit scary from an economics point of view but also highlights inequality given so many Americans are paycheck to paycheck or hold so much debt while there are trillions to push around in money markets and billions to fund losses at Uber and others.
https://www.washingtonpost.com/business/economy/banks-are-paying-people-to-borrow-money-thats-alarming-news-for-the-global-economy/2019/08/13/8eb7b9ca-bada-11e9-a091-6a96e67d9cce_story.html https://www.washingtonpost.com/business/economy/banks-are-pa...