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Forum Post: Corporations are sitting on $3 trillion in cash....

Posted 3 years ago on Oct. 20, 2011, 7:23 p.m. EST by OurTimes2011 (377) from Arlington, VA
This content is user submitted and not an official statement

...and not creating a single job. They know they cannot trust the banks, so they are not investing.

So much for trickle down.

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85 Comments


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[-] 3 points by beautifulworld (22101) 1 year ago

Corporate cash is up to $1.45 trillion.....

http://www.forbes.com/sites/afontevecchia/2013/03/19/u-s-companies-stashing-more-cash-abroad-as-stock-piles-hit-record-1-45t/

....while wages decrease, benefits are cut, unemployment remains high, etc.

[-] 2 points by FuManchu (619) 3 years ago

They will create jobs if there is demand. Not just because they have money. There are no jobs because there is no demand because people arent spending because they dont have jobs.

[-] 1 points by CapitalismRulesPeriod (160) 3 years ago

the vicious cycle...

[-] 1 points by FuManchu (619) 3 years ago

In theory, government economic stimulus is supposed to create temporary artificial demand that then snowballs into real demand and growth. Like positive feedback.

[-] 0 points by CapitalismRulesPeriod (160) 3 years ago

to bad the goverment is taking it from people in taxes so they don't really get any extra money

[-] 1 points by FuManchu (619) 3 years ago

Yes. That is why lower taxes are good.

[-] 1 points by ErictheRed (5) from Brooklyn, NY 3 years ago

No, that's why lower taxes on the working class and poor is good. The richest 1% or so should have higher taxes.

But to really create jobs there needs to be tax on corporate profit, and government programs to create jobs, by, say building homes for the homeless, growing food for the hungry, insulating homes, building mass transit, greener energy, etc. But nooooo, that would be "un American."

[-] 1 points by CapitalismRulesPeriod (160) 3 years ago

yep

[-] 0 points by Jonas (71) 3 years ago

the only vicious cycle is the idiocentric sheep who blindly follow such incredibly simple-minded logic as exemplified above.

[-] 1 points by Jonas (71) 3 years ago

So why is OP complaining about them having money and not creating jobs? Looks like you have your own circles as well.

[-] 1 points by stray (219) from Philadelphia, PA 3 years ago

And the vicious circle continues...

[-] 1 points by hotdoghenry (268) 3 years ago

It is simply amazing the stupidity on this site.

It is not the banks that small business doesn't trust, we keep our money in the bank.

It's government that we don't trust!

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

You keep your money in the bank because you have no choice. Consider moving to a credit union:

According to the organizer,

"Together we can ensure that these banking institutions will always remember the 5th of November!! If the 99% removes our funds from the major banking institutions to non-profit credit unions on or by this date, we will send a clear message to the 1% that conscious consumers won't support companies with unethical business practices.

• Research your local credit union options • Open an account with the one that best suits your needs • Cancel all automatic withdrawals & deposits • Transfer your funds to the new account • Follow your bank's procedures to close your account before 11/05"

http://facebook.com/nov.fifth

Here is what I suggest:

Do not move all of your funds. To put this big of a strain on the system may be irresponsible. Move some of your money out. Just opening an account will send the signal we need.

To find a Credit Union:

http://www.findacreditunion.com/ http://locator.cucentral.com/ http://www.findyourcreditunion.co.uk/

You don't trust the government because they have been taken over by the 1%. There is nothing wrong with government per se.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

You keep your money in the bank because you have no choice. Consider moving to a credit union:

According to the organizer,

"Together we can ensure that these banking institutions will always remember the 5th of November!! If the 99% removes our funds from the major banking institutions to non-profit credit unions on or by this date, we will send a clear message to the 1% that conscious consumers won't support companies with unethical business practices.

• Research your local credit union options • Open an account with the one that best suits your needs • Cancel all automatic withdrawals & deposits • Transfer your funds to the new account • Follow your bank's procedures to close your account before 11/05"

http://facebook.com/nov.fifth

Here is what I suggest:

Do not move all of your funds. To put this big of a strain on the system may be irresponsible. Move some of your money out. Just opening an account will send the signal we need.

To find a Credit Union:

http://www.findacreditunion.com/ http://locator.cucentral.com/ http://www.findyourcreditunion.co.uk/

[-] 1 points by marc7173 (2) 3 years ago

The problem with the fools that have the money is that they don't realize that if they pay people more those people will be able to buy and then the 1% will be richer. Their greed and beleif in Trickle Down Economics fron the hirrible Ronald Reagan days has lead them to beleave if they have all the money they are doing great. Those CEO'S, suppossedly highly educated don't have a clue and have destroyed their own futures economically.

[-] 1 points by marc7173 (2) 3 years ago

The problem with the fools that have the money is that they don't realize that if they pay people more those people will be able to buy and then the 1% will be richer. Their greed and beleif in Trickle Down Economics fron the hirrible Ronald Reagan days has lead them to beleave if they have all the money they are doing great. Those CEO'S, suppossedly highly educated don't have a clue and have destroyed their own futures economically.

[-] 1 points by Fedup10 (228) 3 years ago

If the cash is brought back to the USA it is taxed at over 30 percent, so it cheaper for corporations to keep the cash overseas and use it for expansion overseas. If a US corporation needs cash in the US they borrow it and deduct the interest on the loan against the very high corporate US taxes, highest in the world. Simple tax planning based on the tax laws created by our congress.

[-] 1 points by April (3196) 3 years ago

Consumer confidence is necessary to increase demand.

How can we be confident in an economy where Wall Street nearly destroyed the world, and have yet to be brought to justice for their criminal greed? How can we be confident in a country whose democracy has been diminshed by corruption?

Simple plan for increasing consumer confidence. 1 - Wall Street gets prosecuted by the Federal Government and stands trial - by jury. 2 - Eliminate corruption of government by enacting legislation for publicly funded elections.

Consumer confidence soars.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

I agree!

[-] 1 points by OWSProtestor (25) 3 years ago

Corporations have been sitting on more and more cash since corporate taxes have been cut. In other words, corporate tax cuts don't create jobs nor do they stop corporations from going overseas. Reaganomics is a failure.

http://www.obamaftw.com/blog/tea-party/occupy-wall-street-ows-vs-the-tea-party-a-brief-comparison

[-] 1 points by Satyr000 (86) 3 years ago

You can add deregulation to your list.of things that do not create jobs.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Exactly!

[-] 1 points by thoreau42 (595) 3 years ago

Kinda makes you wonder why they don't let up on basic regulation, inspection, and licenses so the average person could more easily go into business for his/herself.

As soon as people start buying locally, and in turn, creating locally, we can all start to create our own jobs. Why sit around and wait for big business to do it?

[-] 1 points by thoreau42 (595) 3 years ago

I don't actually wonder about it, I know why they do it; control.

[-] 1 points by Jonas (71) 3 years ago

Oh my god, corporations are making money? Let's send them to jail! How dare they profit from business! (Sarcasm, for those who might have missed it.)

[-] 1 points by Avoice (81) 3 years ago

Corporations are sitting on all that cash for several reasons. In a deflationary market "CASH IS KING"

[-] 1 points by WildWeasel (32) 3 years ago
[-] 1 points by Rico (3027) 3 years ago

We had a complete meltdown of the banking system in 2008 and MANY companies found they were unable to borrow operating costs as was their norm (GE for example was in REAL trouble for a while there). They no longer ASSUME they will be able to do so. They ALSO have unknown costs coming in the form of health care, increased taxes, etc, and are readying themselves for growth if and when the economy turns around.

From my post at http://occupywallst.org/forum/inconvenient-truths-america/ we can see a good part of the reason consumers who HAVE money aren't SPENDING it... they're retiring debt and building savings at an unprecedented level....

Referencing http://www.federalreserve.gov/releases/housedebt/ we see that Americans spent not only their disposable income, but started borrowing at unprecedented levels starting in 2000 to buy foreign made goods. By 2008, fully 20% of disposable income was going toward household debt payments to pay for all those foreign goods. Our purchase of foreign goods produced a trade deficit that averaged 714 billion per year between 2005 and 2008, or $2.1 trillion in total cash outflow over a three year period ( http://tinyurl.com/CensusTradeData ).

The good news/bad news is that Americans finally decided their debt was too high, and they've being spending much of their disposable income to retire that debt. Per http://www.federalreserve.gov/releases/housedebt/ we see that, in only 3 years, Americans have reduced their debt as a portion of income to levels (11%) we haven't seen since 1995 ! That's good, but it also means they are not spending as much of their income buying products, and that creates a problem in the economy.

Some of this newfound enthusiasm for reduction of household debt comes from the scare everyone got, some from the Dave Ramsey movement, and some from the fact that the Baby Boomers have FINALLY woken up and realized they need to get ready for retirement. Let's hope that when consumers DO start spending, they try and buy at least a FEW things labeled "MADE IN THE USA" !!

Do you think corporations should hire-up to make products nobody is buying ? Of course not. They'll wait until it looks like the consumer is ready to buy again.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Very good.

Companies saw that even if they were solid, they could not borrow from banks for daily needs, as they could six months earlier. This had nothing to do with regulations. The banks were not lending because they could not trust the investment banks to honestly tell them value of what they had in their portfolio. The banks are also selfish and greedy, without consideration for the long term or for the broader society. Corporations and banks became what is called hyper risk adverse.

The only agent who can fix this is the federal govt. Period. They have to create demand by spending.

[-] 1 points by Rico (3027) 3 years ago

Wanna see something scary ?

Visit http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm and check to see who holds the largest dollar value of mortgages..... the US Government ! We picked up about $5 trillion of them in 2010 when we absorbed Fannie/Freddie.

You can get all SORTs of neat economic data on the Fed's site.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Well, well. looks like the Fed is good for something.

Of course, the federal govt owns more mortgages than anyone else. In light of the fradulent behavior of Wall Street, they should. It's called lender of last resort.

[-] 1 points by Rico (3027) 3 years ago

Sure, but whay aren't people upset about Fannie/Freddie CEOs making $14 million salaries just before the crash, the fact that they received the LARGEST single bail-out ($200 billion), the fact that we're now on the hook for $5 trillion in gaurentees, or the fact that Congress had a lot to do with Fannie/Freddie policy?

By the way, the Federal Reserve paper at http://www.federalreserve.gov/pubs/feds/2011/201117/201117pap.pdf is VERY interesting. It provides a quantitative analysis of families surveyed in 2007 vs 2009. I won't editorialize regarding which families got hit hardest by the meltdown, but WILL point out one VERY interesting fact... ALL families reported a 200% increase in their perception of how much savings they should hold. This correlates nicely with the astonishing rate at which household debt as a percentage of income is falling. We'll come out of this recession just as soon as they feel comfortable given their newly conservative perspective on debt vs savings.

[-] 1 points by Rico (3027) 3 years ago

I know folks here won't like to hear this, but the BEST way for the government to spend is to simply issue big tax rebate checks to citizens. Better yet, give them "gift cards" that can ONLY be used to spend so they don't SAVE their rebate check.

Obama's stimulus STALLED for lack of sufficient contracts personnel needed to move THAT much money into the economy according federal contracting laws. There is STILL a shortage of contracts people in the government (at both the state and federal level), and they're STILL trying to get all that money under contract.

Government can give US the stimulus VERY quickly. Unfortunately, politicians LIKE being able to say WHERE the money is first injected into the economy (for obvious reasons).

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Wrong. The best way for govt to spend is on infrastructure: roads, bridges, airports, bus stations, whatever. Early stimulus WORKED. Needed to be bigger.

[-] 1 points by Rico (3027) 3 years ago

I was defining "best" as "fastest/cheapest" I don't disagree with the need to work infrastructure.

[-] 1 points by FuManchu (619) 3 years ago

Both will give more money to people. Lower taxes and increased spending. It will temporarily increase the deficit. Once the economy picks up, part of the increased tax income will offset the deficit. A short term higher tax combined with spending cuts can then bring it down. Many have suggested this. The problem is the politicians are only interested in getting reelected. Not in doing anything of any real value.

[-] 1 points by TIOUAISE (2526) 3 years ago

"Trickle-down economics" is what got so many of us piss-poor....

[-] 1 points by Space (79) 3 years ago

They are going to need the money when the bottom drops out of consumer demand. We need to make sure the money earned in the US stays in the US.

[-] 0 points by justhefacts (1275) 3 years ago

Further down OurTimes2011 tells us that it's not really in "cash", it's in T-bills and money market accounts. rolls eyes which means it's in the stock market or a BANK.

[-] 0 points by justhefacts (1275) 3 years ago

Really? When there's less than one trillion dollars in CASH in circulation in the United States all together? You do know that the Federal Reserve actually controls how much "cash" money is available to circulate. Right?

[-] 0 points by ETBass (65) 3 years ago

Hey dumb ass, corporations are in business to maximize the wealth of it's shareholders, nit create jobs. Get a clue.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Goldman Sachs just set aside $10b for employee bonuses and reported a $450mm loss. Corporations are run for the managers, not shareholders.

[-] 1 points by ETBass (65) 3 years ago

That is incorrect. What is broken is boards of directors that don't do their jobs. Look our system is not perfect, but it is FAR better than any alternative. People who create value make money, those who can't or won't don't. Pretty good system if you ask me.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Wrong again. It's like a car that goes 500 miles per hour, get 120 miles per gallon, and explodes on a random basis after every 5th to 15th ride. Tightly coupled systems break down often.

[-] 1 points by ETBass (65) 3 years ago

Not a sound analogy, proved wrong by the evoking performance and durability of our system.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Again, making my point. Performance and durability of our system, huh? 20% of national wealth lost. 20% decline in household wealth. Unemployment at 20%. (20-20-20) Political system locked down by moneyed interests. Nothing but shills in the media. (Only good station - RT.) Durability? The only durability is the unrelenting greed of the moneyed class and their hold on your mind. This system is not sustainable.

Nice performance and durability.

[-] 1 points by Space (79) 3 years ago

It's too bad they have no loyalty to America. They send the jobs over seas and argue that keeping corporate taxes low will help with employment in the US.

The government should give no contracts to corporations who use foreign labor.

We should have big taxes on dividends paid out of US corporations to foreign entities.

We should raise property taxes on foreign owned real estate.

These guys sold out our kids, for the shareholders.

[-] 1 points by ETBass (65) 3 years ago

Jobs go overseas b/c that's where they belong. Business are not part of the public trust. Get with the program.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Wrong again, my young apprentice. A corporate charter is granted by the people in the public trust.

[-] 1 points by ETBass (65) 3 years ago

I think we are just going to have to disagree on this one :)

[-] 1 points by Space (79) 3 years ago

Wake up man- I'm not going to get with your program. That program is crashing.

[-] -1 points by KnowledgeableFellow (471) 3 years ago

So you have concocted the.......corporations don't trust the banks.....theory? How laughable. That makes no sense at all. Business is waiting to see how much their moves would cost. With Obama, it looks like a lot more than before.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Firms are fearful because of the increased risk of default caused by fraudulent market practices that significantly raise risk in the financial marketplace, not because of any anti-business climate. If this administration were anti business, all of Wall Street would be in jail. They are not.

Either try to stay up with the conversation or don't comment.

[-] 0 points by KnowledgeableFellow (471) 3 years ago

Oh, I'm up with it. For you, or anyone, to say this administration isn't the most anti business administration in decades is laughable.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

No, actually, you have been unable to keep up. Facts, please? See my earlier posts above.

Again, if this administration were anti business, all of Goldman would be in jail.

[-] -1 points by KnowledgeableFellow (471) 3 years ago

All polls of business groups and businesses show Obama as being very anti business. Obama has never been in the private sector, he has no idea how it works. Here is just one opinion piece:

http://www.usnews.com/opinion/mzuckerman/articles/2010/07/16/obamas-anti-business-policies-are-our-economic-katrina?PageNr=1

So, tell us, how has Obama been friendly to business?

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Not interested in the opinion of the corporate media, sorry. Get some independent facts, like this: http://www.youtube.com/watch?v=lqN3amj6AcE&feature=youtu.be

or, here is the only statistic that matters: Profits of U.S. corporations are at record levels even as the U.S. economy gasps for air. Profits have been totally divorced from the economic crisis.

Now, you tell me, HOW IS THIS UNFRIENDLY?

You are done. Dismissed.

[-] 1 points by cmt (1195) from Tolland, CT 3 years ago

There are a number of new laws he's supported that have CEO's foaming at the mouth. They consider that unfriendly.

[-] 0 points by KnowledgeableFellow (471) 3 years ago

What does a European trader have to do with the Obama Administration?

You haven't said how Obama is business friendly..........................

[-] -1 points by PlasmaStorm (242) 3 years ago

This may blow your mind but corporations need reserves. We're expecting European credit to be downgraded in the next few days. At some point, these people need to ask themselves whether the Euro is more important than their own economies.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Corporations did not need or hold $3t in reserves from 2000 to 2008. Why is that? Yes, we are expecting the euro to be downgraded because US investment banks used the dollar's status as world reserve currency, obtained over 60 years, to sell bogus securities to governments and banks around the world. The investment banks lied and purposely misled clients about the value of these securities. When they declined significantly in value, foreign governments and banks desperately needed additional capital quickly. The securities led to losses which led to the downgrade. The downgrade led to public spending cuts, at exactly the wrong time.

Therefore, your argument is circular, shallow, uninformed and false. Got it?

TCI.

[-] 1 points by PlasmaStorm (242) 3 years ago

You write that, "corporations did not need or hold $3t in reserves... Therefore, your argument is circular, shallow, uninformed and false. Got it?"

How much cash on hand they need is their decision. Theirs. Not yours, theirs. Got it?

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

How nice. I think I got to you. The way to determine how much money they need is to look at the historical record. $3t is an all time high. Thus, they do not need to hold onto that money.

[-] 1 points by ETBass (65) 3 years ago

Why shouldn't they hold on to it? It's their money. You have no claim to it. It's private property, a foreign concept to OWS.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

We are here because of a lack of jobs, a lack of long term thinking about what is in society's and the company's best interest.

[-] 1 points by ETBass (65) 3 years ago

Societie's purpose is not to create jobs, nor is a company in place to create jobs. Accompany exists to maximize the wealth of the shareholders and to do so often they need skills and performance, hence jobs are created. It's not a firms responsibility to hire people, that is an offshoot of fulfilling their primary purpose. The system works great until the govt sticks their nose into the mix to mandate counter productive activity.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

So we are back to this? All great wealth in this country has been created by govt. (There is a govt supported thing called the internet you might wanna check out).

Corporations maximize manager wealth, not shareholder wealth. Look at Goldman. The performance and skill argument is also false....look at the managers who wrecked the global economy. Skilled group there, huh. And what was their performance record? Let's see. Destroyed $10 trillion in global wealth.

You are showing why OWS exists, making all of the points. Thanks!

[-] 1 points by ETBass (65) 3 years ago

Shareholders own the firm.

Govt creates no wealth, it limits and misallocates it.

Management in a firm is ultimately responsible to the owners. You keep referring to Goldman, which is one if millions of corporations both private and public. What I say is 100% correct, though some of it has been bastardized, the tenants are correct and the foundation of a functional and productive economy.

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Great! We agree on Goldman. See, that wasn't so hard, was it?

Suggested OWS Action: Goldman Greed-in.

Bring signs. Gather in front of the firm's office in

DC: 101 Constitution Avenue Northwest, Washington, DC 20001 or

NY: 30 Hudson Street.

http://online.wsj.com/article/SB10001424052702303828304575180581255747658.html

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Great! We agree on Goldman. See, that wasn't so hard, was it?

Suggested OWS Action: Goldman Greed-in.

Bring signs. Gather in front of the firm's office in

DC: 101 Constitution Avenue Northwest, Washington, DC 20001 or

NY: 30 Hudson Street.

http://online.wsj.com/article/SB10001424052702303828304575180581255747658.html

[-] -2 points by Sellerman (139) 3 years ago

Hey OurTimes2011: Is there anything you have that you 'do not need'? Anything? If so, give it to the collective or stop being a hypocrite. Either way, you're ignorant to a lot of dynamics of the private sector markets. I'm sure your professor at blah blah blah university never held a private sector job and just sucked the government tit so, you never learned the value of the private sector.

The R-E-A-S-O-N those corporations are holding trillions is because they don't want to deploy capital in an anti-business environment like this! How about Gibson Guitars getting raided by the Feds:

http://www.gibson.com/en-us/Lifestyle/News/gibson-0825-2011/

Dude, if you had a successful business, were responsible to employees, their families and your own, you wouldn't be holding the same views.

Come to think of it, if I were in your shoes, I'd want the 1% (really 40%) of the population to get taxed more and have that money sent to me too!!!

I can see your point. Can you see mine?.....remember to be 'tolerant' of others' views......

[-] 2 points by OurTimes2011 (377) from Arlington, VA 3 years ago

See my post above.

Having anything I do not need? Irrelevant. Your view of private sector dynamics? Flawed. Professor at blah blah, etc...Childish. Reason corps are holding trillions? Wrong. Gibson Guitars? Possibly criminal and now...busted.

Govt regulation has nothing to do with anything, except that the lack of it allowed these banks to wreck the global economy.

Neocons use fear of regulator as an excuse for anything. TCI.

[-] -1 points by Sellerman (139) 3 years ago

How many employees do you have, High Times...I mean OurTimes2011? Didn't think so! You don't know what the hell you're talking about. I do. Self employed and an employer since 1994.

Gov't regs nothing to do with anything?? Really? Build a new power plant in California.

Open a coal mine under Obama (He said he's put them out of business by making regulation so freakin' hard & expensive...remember?)!!!

Gibson: You don't even know what the hell you're talking about! Read something instead of reacting with emotions. It's on the link I posted!

Your parents much get tired of dealing with you like this...

[-] 1 points by OurTimes2011 (377) from Arlington, VA 3 years ago

Employees I have? Irrelevant. Power plants in CA? Coal mines? I'll grant you these. Given the social costs, regulation is required. Gibson? You brought it up. Parents? I assume you meant MUST get tired, not much get tired. TCI, really.