U.S. companies’ cash hoard keeps getting bigger

[eridani]

Jeebus, you stupid fuckers! WTF did you expect would be the end result of your 30 year project to make most Americans poorer?

http://blogs.wsj.com/economics/2011/03/12/number-of-the-week-companies-cash-hoard-grows/

After hitting new highs in five of the last six quarters, nonfinancial corporations’ cash and other liquid assets reached $1.9 trillion at the end of 2010, according to the Federal Reserve. That’s 7% of all their assets, the highest level since 1963.

On the bright side, the cash pile reflects the resilience of America’s companies and capital markets. Thanks in part to improved resource-management systems, executives have been able to act with lightning speed, slashing costs during the recession and hiring only as much as they need during the recovery — tactics that have generated record profits, if not jobs. Dynamic bond markets have allowed big companies to raise vast amounts of money even as banks have pulled back on lending. That has helped the U.S. avoid the kind of bankruptcy epidemic many had expected.

At the same time, though, the persistent growth of companies’ cash hoard suggests a problem: Businesses appear to lack the confidence in the recovery needed to plow the money back into new projects and hiring. In the final quarter of 2010, capital expenditures amounted to $975 billion, or 6.6% of gross domestic product — up from a low of 5.4% in 2009 but still well below the 10-year average of about 8%. Nonfarm employers added a monthly average of 136,000 jobs in the past three months, just a bit more than required to keep the unemployment rate from growing.

Meanwhile, companies are giving some cash back to their shareholders through stock buybacks, which reached $86 billion in the final quarter of 2010, the highest level since early 2008. That’s an easy way to boost earnings per share, but hardly a sign of optimism. Perhaps investors will find a better use for the money, such as financing the startups that create an outsized share of new jobs.

[ixion]

1. "lack the confidence in the recovery"

Because there IS NO RECOVERY.

[Xipe Totec]

2. Making themselves ripe targets for hostile takeovers

You can use their own cash as collateral in a hostile takeover, buy the company, pay it off with their own cash, sell the assets, and walk away.

[rfranklin]

3. I think they are holding on to exacerbate the situation...

which will benefit the Republicans and the whole right wing objective of grabbing power through economic chaos and manufactured crises.

Just my intuition.

[ProfessionalLeftist]

5. When Newtie is selected in 2012

They'll suddenly start hiring.

[tomg]

4. "Appear to lack confidence"

is simply code for - "give us everything we want or else."

[NoTimeToulouse]

6. Isn't this kind of non-action an echo of the early 1930s?

[grasswire]

7. isn't this a redistribution of wealth?

"Meanwhile, companies are giving some cash back to their shareholders through stock buybacks, which reached $86 billion in the final quarter of 2010, the highest level since early 2008"

[notesdev]

8. Yeah? How about their debt levels?

Ah, that makes that "cash hoard" seem pretty tiny now, doesn't it?

Anyone who thinks US companies are in great shape due to this factoid (which is really more an artifact of back-asswards monetary policy than anything) is due for a rude awakening.