Companies are flush with cash...what's up?

[JimH52]

USA TODAY

 

[Wiseacre]

Nowhere to go with it I guess. No point in hiring and expanding if there's no customers.

 

[dilloduck]

It's mad money. Keeps them from having to borrow it if a new crisis hits. It must really piss off the banks.

 

[ShackledNation]

Nowhere to go with it I guess. No point in hiring and expanding if there's no customers.

If they could expand their production and increase the supply of goods while keeping costs of production low, they could afford to offer lower prices to entice consumers into buying.

Normally it is during a recession when new small businesses arise to create jobs and grow the economy while those hit by the recession are trying to recover. But regulation is high, taxes are high, there is the looming threat of having to pay more taxes, face more regulation, and deal with Obamacare...I would be more surprised if businesses actually were hiring.

Banks are also refraining from loaning because, well, too many bad loans led to their demise.

 

[Douger]

NAFTA / CAFTA / Caribbean Initiative.

 

[Baruch Menachem]

Cash right now is the only profitable use of the funds. Creating products at a loss reduces cash that might be necessary to stay in business. If people aren't going to buy, there is no point in creating inventory. Cash at low interest rates keep the company afloat.
Inventory is a series of expenses, and having product just stay on the shelf does no one any good.

 

[dilloduck]

They could be financing thier own r&d or expansion projects but I think that would require some faith in the economy.

 

[martybegan]

It's mad money. Keeps them from having to borrow it if a new crisis hits. It must really piss off the banks.

not sure how. They have to place the money somewhere, and most of it in a liquid state. Only place to put it would be banks, which gives them cash assets as accounts.

 

[Baruch Menachem]

When you are in uncertain times, you aggressively cut costs. It might be a cool thing to finance R & D, but again that is an expense, and cash in the bank is cash in the bank.

You only take big risks when there are big returns. In the rhetoric of the Obama administration profit is an obscenity. Taking on projects that would bring large profits just makes you a target. There is no point to that.

 

[rdean]

Nowhere to go with it I guess. No point in hiring and expanding if there's no customers.

If they could expand their production and increase the supply of goods while keeping costs of production low, they could afford to offer lower prices to entice consumers into buying.

Normally it is during a recession when new small businesses arise to create jobs and grow the economy while those hit by the recession are trying to recover. But regulation is high, taxes are high, there is the looming threat of having to pay more taxes, face more regulation, and deal with Obamacare...I would be more surprised if businesses actually were hiring.

Banks are also refraining from loaning because, well, too many bad loans led to their demise.

You can't entice people to spend if they have no money. Taxes are the lowest they've been in more than 50 years.

Grow up.

 

[imbalance]

Corporations are hoarding their cash reserves until the debt bubble bursts, which they know is far closer to happening than the government is telling its people. Unless it preemptively defaults, any taxes paid to the US Government at this point are simply asset transfers to foreign owners of US debt.

 

[Toddsterpatriot]

Nowhere to go with it I guess. No point in hiring and expanding if there's no customers.

If they could expand their production and increase the supply of goods while keeping costs of production low, they could afford to offer lower prices to entice consumers into buying.

Normally it is during a recession when new small businesses arise to create jobs and grow the economy while those hit by the recession are trying to recover. But regulation is high, taxes are high, there is the looming threat of having to pay more taxes, face more regulation, and deal with Obamacare...I would be more surprised if businesses actually were hiring.

Banks are also refraining from loaning because, well, too many bad loans led to their demise.

You can't entice people to spend if they have no money. Taxes are the lowest they've been in more than 50 years.

Grow up.

The top rate in 1988 was 28%.

That's lower than the 35% rate now.

 

[Trajan]

Cash right now is the only profitable use of the funds. Creating products at a loss reduces cash that might be necessary to stay in business. If people aren't going to buy, there is no point in creating inventory. Cash at low interest rates keep the company afloat.
Inventory is a series of expenses, and having product just stay on the shelf does no one any good.

yup. co's no matter what their gross profit, if their margins go down, wall st hammers them.

 

[Trajan]

They could be financing thier own r&d or expansion projects but I think that would require some faith in the economy.

the smart ones are. they can write a lot of that off too.