Cash-Hoarding Companies Neither Spend Nor Lend, Fouling Economy Further

[Bill USA]

http://www.huffingtonpost.com/2012/07/12/cash-hoarding-companies-spend-lend-economy_n_1666424.html

WASHINGTON -- The job market is stagnant and the GOP has the federal government tied up in knots, so the country's short-term economic future is in the hands of America's titans of industry and finance.

But despite having an unprecedented amount of cash on hand with which to create jobs -- more than $3 trillion, nearly four times as much as the 2009 stimulus bill -- the corporations aren't spending and the banks aren't lending.

"They've been making money, and they haven't been spending it. So it sits there," said Jared Bernstein, a former economic adviser to President Barack Obama now at the non-partisan Center on Budget and Policy Priorities. "The economy has been growing since the second half of 2009, and the vast majority of households have seen very little of that. It's got to be going somewhere."

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"In a more normal economic recession, you would expect business reinvesting to grow," said Brandon Rees, deputy director of the office of investment at the AFL-CIO, the labor union federation. But instead, "that money just keeps piling up," he said. "The CEOs just can't figure out what to do with it all."

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[Warpy]

1. This is why they need to be TAXED

Pouring this stuff back into the company to avoid the tax man is the only way they're going to be forced to spend any of that cash.

They're certainly in no hurry to dole it out to stockholders!

[mbperrin]

4. Yep, a return to 1956 tax levels of 92%

would blast some of that cash loose.

That's the real reason for the high rates - no one really pays them, but they do have to actually do something in the real world to avoid them. As it is now, there is no penalty for sitting on it, except the one everyone else pays - the ongoing recession.

[jtuck004]

7. And do what with it? Pay the banks more? Stupid war? I'm all for it, but unless other

major changes take place, with a $20-40 trillion investment in human training and upgrading factories that have been rusting for 20, 30, 40 years, we would just waste it wishing for the dead past to save us like most seem to be doing now. There would be no net gain, would just burn up like Kansas wheat supporting an economy increasingly basing its foundation on serving coffee and expanding the number of home health aides.

[Po_d Mainiac]

8. COH comes in real handy when

bills need to be paid and payrolls need to be paid.

The alternative is Chapters 9/11.

[Demeter]

2. Nor do they pay their workers

Book 'em, Danno.

[Lucky Luciano]

3. Europe is a huge concern. Another credit crisis is the fear.

Last edited Wed Aug 22, 2012, 11:43 AM - Edit history (1)

Hence they stockpile cash. All we need is for Israel to send a few missiles to Iran and they will look very smart to have kept that cash on hand. In 2008 short term lending completely evaporated (boiled away violently really) and those without cash either went bankrupt or had to give up major concessions to get cash. Now they just hoard cash - something about fear and fear itself seems to apply here.

[Joe Shlabotnik]

5. The trickle down theory needs an enema.

Its the same shit here in Canada, or even worse in terms of scale. Canadian companies are sitting on $860 Billion (and we're only 1/10 the size of USA).

[jwirr]

6. And if and when our entire economy goes down they will blame President Obama. If this bunch of

businesses (big and small) had been around in the Great Depression we would still be standing in the same breadlines. I also believe that these same businesses are to blame for allowing so many of us more credit than we should have had and they are not taking their share of this blame. What we have been doing for the last 30+ years in business has not helped anyone but they did not get the message.