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More proof that a tax cut for the wealthy and corporations will solve... NOTHING! They already have more money in their coffers than they did before the recession. But they won't spend it. Why? No one is buying. Why? The middle class is falling apart. Why? Bush Tax Cuts.

http://finance.yahoo.com/news/US-companies-hoarding-almost-rb-2687745036.html?x=0&.v=1

NEW YORK (Reuters) - U.S. companies are hoarding almost $1 trillion in cash but are unlikely to spend on expanding their business and hiring new employees due to continuing uncertainty about the strength of the economy, Moody's Investors Service said on Tuesday.

As the economy stabilizes companies are also more likely to spend on share repurchases and mergers and acquisitions, Moody's added.

Companies cut costs, reduced investment in plants and equipment and downsized operations in order to boost cash holdings during the recession. As the corporate bond market reopened many companies also boosted cash levels by selling debt and refinancing near-term debt maturities.

Nonfinancial U.S. companies are sitting on $943 billion of cash and short-term investments, as of mid-year 2010, compared with $775 billion at the end of 2008, Moody's said. This would be enough to cover a year's worth of capital spending and dividends and still have $121 billion left over, it said.

However, "we believe companies are looking for greater certainty about the economy and signs of a permanent increase in sales before they let go of their cash hoards, which they suffered so much to build," Moody's said in a report.

"Given low demand and capacity utilization within certain industries, companies are wary of investing their cash in new capacity and adding workers, thereby doing little to abbreviate the jobless recovery," it added.

Around one quarter of the cash is held overseas and is unlikely to be repatriated to the United States, Moody's said.

Meanwhile only 20 companies hold a large portion of corporate cash balances, with $346 billion on their balance sheets, or 37 percent of the total, Moody's said.

Cisco Systems (NasdaqGS:CSCO - News) has the largest cash balance, at $39.86 billion, while Microsoft (NasdaqGS:MSFT - News) is second with $36.79 billion, Moody's said. Google (NasdaqGS:GOOG - News) has the third-largest balance with $30.06 billion, followed by Oracle (NasdaqGS:ORCL - News) with $23.64 billion and Ford Motor Co (NYSE:F - News) at $21.89 billion.

Technology companies held the most cash as a sector, at $207 billion, followed by pharmaceuticals with $124 billion, energy at $105 billion, and consumer products with $101 billion, Moody's said.
 

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But they won't spend it. Why? No one is buying. Why? The middle class is falling apart. Why? Bush Tax Cuts.
So, if I understand correctly, the middle class has been hurt by keeping more of the money they earn? :huh:
 

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Are you surprised? I'm not. Its not only bad business practice, but foolish to make decisions when no one knows what the cost or even the rules for that matter are going to be. We are now 2 months away from the Tax cuts expiring and don't even know if they are going to be extended or not.

also, very few people have a grasp on what the cost of Obama care are going to be. There's no way of factoring that into budgets yet. Any preliminary assumptions are that it is going to increase costs greatly.

Coming off an economic slow down where credit has dried up and many unanswered variables exist it would be moronic NOT to be hording cash at this time.
 

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The facts are right, but the conclusion is wrong. It's not the tax cuts, it's the business climate uncertainty. If corps got the idea that government was on their side and not about to lower the boom on them, they would start to act normal again. Basically, they are waiting for some Republicans to get some power again.
 

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The facts are right, but the conclusion is wrong. It's not the tax cuts, it's the business climate uncertainty. If corps got the idea that government was on their side and not about to lower the boom on them, they would start to act normal again. Basically, they are waiting for some Republicans to get some power again.
:agree:

What is it with the tax cuts and people thinking it's bad to keep and spend more? I've heard the argument they need to expire to lower the debt. Yeah that will happen. And now the tax cuts are causing the middle class to collapse. Business better be socking some reserves back to stay liquid through all this. It's that or fold up and put more people out of work.
 

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People are hoarding cash now because they are afraid of future tax increases. It is impossible to save money in heavily taxed environment.

Every heard the story of the grasshopper and the ant?
 

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More proof that a tax cut for the wealthy and corporations will solve... NOTHING! They already have more money in their coffers than they did before the recession. But they won't spend it. Why? No one is buying. Why? The middle class is falling apart. Why? Bush Tax Cuts.
Whaaaaat???? :laughing:
 

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Our company is holding cash cause we have no idea what is coming. How much this health insurance is going to cost us.. how much taxes are going up and if the economy falls you need all the cash you can get to stay in business!!!! Thats it spend your cash and if things turn for the worse your broke and go under...
 

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Our company is holding cash cause we have no idea what is coming. How much this health insurance is going to cost us.. how much taxes are going up and if the economy falls you need all the cash you can get to stay in business!!!! Thats it spend your cash and if things turn for the worse your broke and go under...
Exactly. :agree:

Businesses are holding cash reserves for exactly this reason as are smart individuals. This has nothing to do with corporate greed or tax cuts.
 

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I believe right now we don't have people in office that have run a business and understand how things work. Obama has never run a business and doesn't understand how much health care cost us and 1 employee can make your rates sky rocket. We had a guy here get hurt and it cost everyone here including me. I know everyone wants free healthcare and all my employees don't understand why they don't make 20$ an hour either but you cant have everything and you cant give it away. You have to look at the bottom line and some years are good and some are bad. If I have a good year why try to punish me and take it away.
 

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If I have a good year why try to punish me and take it away.
Because you're an evil Capitalist! :devil: It is unfair for you to have good fortune on the backs of your workers and others not.

:smack
 

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I was watching Fox Business and they had a guest on that worked for Fannie Mae before it moved over 'to the dark side' as he put it.

They asked him some questions about the foreclosure mess.

One of his responses, and it made sense to me, was that with the Fed keeping interest rates at 0% all the investments that 'Main Street' has is slowly devalueing to 0% as the interest rate is catching up to the investments. He said the only thing the 0% interest rate is doing to help anyone is to recapitalize the banks. It's all happening at the expense of the middle class, again.

Couple that with this:
Are you surprised? I'm not. Its not only bad business practice, but foolish to make decisions when no one knows what the cost or even the rules for that matter are going to be. We are now 2 months away from the Tax cuts expiring and don't even know if they are going to be extended or not.

also, very few people have a grasp on what the cost of Obama care are going to be. There's no way of factoring that into budgets yet. Any preliminary assumptions are that it is going to increase costs greatly.

Coming off an economic slow down where credit has dried up and many unanswered variables exist it would be moronic NOT to be hording cash at this time.
 

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I am only spending whats absolutely necessary.. the political outlook is too volatile, the fed's QE is too ridiculous, and the economy has slowed down.

No one knows what January, or even the rest of the year might bring. Same thing that happened with Carter.. gotta hunker down and try to ride it out.
 

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More proof that a tax cut for the wealthy and corporations will solve... NOTHING! They already have more money in their coffers than they did before the recession. But they won't spend it. Why? No one is buying. Why? The middle class is falling apart. Why? Bush Tax Cuts.

http://finance.yahoo.com/news/US-companies-hoarding-almost-rb-2687745036.html?x=0&.v=1

... are unlikely to spend on expanding their business and hiring new employees due to continuing uncertainty about the strength of the economy...

As the economy stabilizes companies are also more likely to spend on share repurchases and mergers and acquisitions, Moody's added.


However, "we believe companies are looking for greater certainty about the economy and signs of a permanent increase in sales before they let go of their cash hoards...

...companies are wary of investing their cash in new capacity and adding workers...
Don't you read what you post?

The clear overiding message in YOUR source is economic uncertainty in the future.

- Uncertainty over the future of the Bush Tax Cuts
- Uncertainty over the cost of Obamacare
- Uncertainty over environmental regulation and legislation

Any casual reading of economic history will demonstrate that under those conditions, more companies than not will do everything they can to accumulate cash and other liquid assets.

And yet, you choose to blame the one item that if made permanent, would do a great deal to provide some level of certainty for business planning.

Steven
 

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Don't you read what you post?

The clear overiding message in YOUR source is economic uncertainty in the future.

- Uncertainty over the future of the Bush Tax Cuts
- Uncertainty over the cost of Obamacare
- Uncertainty over environmental regulation and legislation

Any casual reading of economic history will demonstrate that under those conditions, more companies than not will do everything they can to accumulate cash and other liquid assets.

And yet, you choose to blame the one item that if made permanent, would do a great deal to provide some level of certainty for business planning.

Steven
:laughing: He also forgot the part about the 20 companies that hold 37% of the money, are all big democrat supporters.. you would think they would be pouring cash out in an effort to keep the dems in power.. :crazy::laughing:
 

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One of his responses, and it made sense to me, was that with the Fed keeping interest rates at 0% all the investments that 'Main Street' has is slowly devalueing to 0% as the interest rate is catching up to the investments. He said the only thing the 0% interest rate is doing to help anyone is to recapitalize the banks. It's all happening at the expense of the middle class, again.
That's just not true.

It is an interesting point, and it does involve the average joe with saving or low return investments, and also our homes, but far from true for most big investors.
 

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Discussion Starter #17
I am only spending whats absolutely necessary.. the political outlook is too volatile, the fed's QE is too ridiculous, and the economy has slowed down.

No one knows what January, or even the rest of the year might bring. Same thing that happened with Carter.. gotta hunker down and try to ride it out.
:agree:

With a Dem in the WH, Pubs in the House, and a narrow Dem hold on the Senate... Nothing will get done. For better or worse, nothing will get done. Well, except for the boo-hoo gotcha votes. You know. The ones that caused this debt in the first place?
 

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:agree:

With a Dem in the WH, Pubs in the House, and a narrow Dem hold on the Senate... Nothing will get done. For better or worse, nothing will get done. Well, except for the boo-hoo gotcha votes. You know. The ones that caused this debt in the first place?
And now Barney Frank's primary goal in the lame duck session, is expanding the CRA to include all financial institutions, not just banks. Talk about doubling down on a bad hand.. :crazy:
 

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No one knows what January, or even the rest of the year might bring.

I do. I may be off by a couple of months... but I have been warning of this for well over year, now. Crazy Preacher -and his prophesize-ing.

In case you weren't there for it... a second crash is looming, early next year. I'm not buying until late next year. Interest rates will be high... but prices will be lower. Keep the property for 5 or 6 years... sell at a prophet. It's a wash... but you are in the market. Being in the market is better then waiting for the optimum time... unless you are planning to live in the residence until you die. If you are... buy now.
 

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I do. I may be off by a couple of months... but I have been warning of this for well over year, now. Crazy Preacher -and his prophesize-ing.

In case you weren't there for it... a second crash is looming, early next year. I'm not buying until late next year. Interest rates will be high... but prices will be lower. Keep the property for 5 or 6 years... sell at a prophet. It's a wash... but you are in the market. Being in the market is better then waiting for the optimum time... unless you are planning to live in the residence until you die. If you are... buy now.
From what I'm seeing I would agree. There will be another market adjustment (crash) to get things back in order. To many indicators pointing in that direction. Lets hope for a quick recovery. Also the elections outcome will determine consumer confidence throughout the next year.
 
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