Hoarding cash: US firms sitting on $2T on balance sheets

NY Post ^ | August 6, 2011 | JOHN AIDAN BYRNE

[lowbridge]

Either way, with unemployment at 9.1 percent, the top corporations are not using it to hire workers or expand benefits.

American corporations are in a sweet spot, according to some. They have a motivated work force , and with muted demand, no need to expand and hire more workers.

The sums at stake have triggered alarms.

"Companies should be using the cash to either invest in new products to allow them to grow, or to make acquisitions if they are not good at research and development," said Peter Cohan, a management consultant and venture capitalist. "Alternatively, they should use the cash to pay back shareholders in dividends."

That big, liquid pile is accumulating at a record pace: ten consecutive quarters of growing cash on the corporate sidelines, according to Standard & Poor's. That's despite America's jobs crisis and a faltering economy.

[Tzimisce]

What can you blame them?

We have a government that is threatening them with all kinds of new taxes and regulations.

[QBFimi]

Of course they’re sitting on cash - my father did the same thing in the ‘30s with his business during the days of FDR.

[nascarnation]

The POTUS after Baraq (Jan 2013) will benefit from a HUGE surge of economic activity.

[AnotherUnixGeek]

and with muted demand, no need to expand and hire more workers.

Muted demand and a president who is openly hostile to business.

[mnehring]

Its called a safety net. Businesses don’t know what will happen tomorrow with the situation we are in so they have to keep as much cash on hand to deal with emergencies and keep their doors open.

[Eagle of Liberty]

Bulls###! They should do what they feel is best for their company and if that means holding a non-violent protest against this regime in the form of dollar acquisition, I say more power to them.

[EBH]

In the grand scheme of things ...whose business is it anyway if they are hiring or not, spending or not, investing or not. No one has the Right to question them except maybe their bond holders.

[Truth29]

Sooner or later Obama will try and take these balances for the “greater good.” It might take the form of a capitol asset tax, an inactive balance tax, or some other scheme that will hide its true purpose while being sold as necessary to save the country.

[Tzimisce]

The biggest problem is that the rogue’s gallery of terrible libs will still be there: Pelosi, Reid, Frank, Schumer, etc.

The people who really need to be punished for this won’t be.

[Starboard]

Businesses are on strike. They are simply protecting themselves by conserving cash in an uncertain and often hostile economic environment. Individuals are basically doing the same thing.

[pepsionice]

One of the things which really aren’t written about in the 1930s....is that folks did make money....and just sat on it for the most part. No one truly felt secure anymore. They can all talk about FDR and all the infrastructure that he built. But in the end...we had money in early and mid-1930s to take off and be prosperous again, and we simply didn’t do it. The same thing exists today. And no, they will not pay out dividends to stock-holders, until they know how stable the situation really is.

I will offer this prospective as well. Once we turn some corner...people start feeling really positive....the economy will take off, and we are looking at one of the best economic periods of the past 100 years. The bond rating goes back AAA, and stocks will soar.

[RayChuang88]

I was going to post this article here earlier. Indeed, see my comment on the bottom of the article--Businesses who have a huge amount of liquid assets aren't spending because of the unstable economic situation worldwide currently. Why do you think Apple, Inc. has US$76 BILLION in liquid assets held in banks around the world? They will need that cash just to survive the current bad economic times.

[Truth29]

oops. capitol = capital, but that may have been a Freudian slip.

[Army Air Corps]

Of course they are “hoarding” cash (the new *gimmiespeak for holding cash in reserve); businesses have no idea from one day to the next what new cost (in the form of taxes or regulations or both) the lunatic in the White House shall decide to impose upon them. It used to be called hedging your bets, now, it is called “hoarding cash.”

*Gimmiespeak - the language of those who continuously expect others to provide a handout.

[taildragger]

Going Galt in their own way, waiting out the narcissist potentate, waiting for 1/23/2013 when Madam President is sworn in.

Can ya blame them?

[Uncle Miltie]

Obama promises to punish success. Why try?

[EGPWS]

Of course they’re sitting on cash - my father did the same thing in the ‘30s with his business during the days of FDR.

Exactly!

0bama with his directives has forced business to "hold" for lack of faith in investment.

Hell, I'm doing the same at home...

[tcrlaf]

HELL YES, they are hoarding cash...

They have NO IDEA what’s coming at them next from Obama and the DC Incompetents. Wouldn’t you??

A Company hoarding cash is like a family hoarding food for a winter no one knows how long will last...

[PGR88]

Don’t tell Obama, or he will want it.