Posted on 04/01/2010 2:03:41 PM PDT by jerry557
One piece of economic data that has caught the attention of Byrnes, and others in his predicament, is a fairly staggering figure that comes out of the Bureau of Economic Analysis: Despite widespread unemployment, the BEA reports that U.S. corporations, reluctant to expand in an uncertain economy, are sitting on $1.6 trillion in cash reserves, a record amount, according to BEA economist Greg Key.
Even looking at the companies in the Standard & Poor's 500 index of blue chips -- and stripping out financials, which are required by regulators to keep large cash reserves in order to cushion against risk -- the cash on hand number is still rather monstrous: $1.1 trillion. To put that in perspective, as a percentage of companies' total market capitalization, that $1.1 trillion is more than double the ratio seen before the crisis.
"Cash is piling up faster than companies can figure out what to do with it," said David Bianco, head of U.S. equity strategy at Bank of America.
Asked about the mountain of corporate money sitting on the sidelines, the out-of-work Byrnes offered his own suggestion for what to do with it.
"Companies should absolutely spend some of that money to put people back to work," Byrnes said by telephone earlier this week, clearly frustrated. "I suppose they need to make shareholders happy, but come on already."
"Companies slashed their work forces and now find that they could function far more resourcefully than they ever realized possible," Bianco said. "If anything, we could start to see some of the money being used to expand overseas or to acquire other companies. In either case, that does not bode well for job creation. In fact, mergers lead to job reductions unfortunately."
(Excerpt) Read more at abcnews.go.com ...
This type of news is what will give the socialists lots of ammo for more "reform." And that will be a winning issue. A lot of people out there are struggling to find jobs and pay the bills. Yet companies are sitting on $1.6 trillion and none of them are hiring? Not good.
Hoarding? No bias there, eh?
Don’t tell obama and waxman
They will be ramming through an “excessive cash holdings tax.”
They are just waiting for the storm to pass.....
Companies will start hiring as soon as economic prospects improve. The socialists will of course use this fact, but if will only exacerbate the problem, and the worse things get, the less likely it is that Hussein gets re-elected, regardless of policy.
People are hoarding cash since the marxist was elected. Businesses and people want to survive. Businesses and people hat uncertainty and as long as the Dems control Congress and the usurper is in the white hut - very little will change.
Why WOULD they hire workers, knowing the taxes that are going to come down on them?
This novel hoarding cash thing has a name.
It is called “saving”.
People not indoctrinated by leftists consider it a virtue.
....after Odumbo’s Caterpillar fiasco who can blame them?
Just another attack by the thieves to throw the red herring out there.........
I sure wouldn't.
Its too damn funny seeing these young ignorant Obama types around here driving in their low riders that are falling apart with their Obama car stickers displayed proudly.
By the time they pull their HEAD OUT, it will be waaaaaaaaay too late.
You amass cash when the credit markets are tight and you have uncertainty on where things are going to be in the future. This is a classic deflationary situation.
It’s the perfectly smart thing for them to do. Don’t hire people you don’t need, and when the sitting government has proven there’s no tax they aren’t willing to pass make your warchest fat.
Who the hell would hire a worker with ObamaCare and eternal unemployment essentially making people employees for life?!
contract workers, outside labor, where ever possible!
Maybe they’re saving for a rainy day. I certainly don’t blame them when there are storm clouds overhead and in the horizon as far as the eye can see.
“....reluctant to expand in an uncertain economy...”
#####
Soft-pedaled, pussy safe-speech propagandizing tripe.
“uncertain economy” = a Communist government that has declared not just war on business, but on honest productivity itself.
Indeed, when the demand for their product or service requires a larger work force, they'll hire.
This is a set up to blame companies and not bammie for no job growth......I tried, but those evil capitalist are to greedy yadda, yadda....just like the phony tax credit for hiring.
Well, obviously the only solution to this is for the federal government to step in and make them do the right thing.
How easily the left falls right into line with fascism.
Cash/Currency is NOT a good thing to be “hoarding” right now.
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