Corporations & investors have a problem: Too Much Cash!?!

[JHB]

From the WSJ, via skimble:

It sounds perverse, but one of the emerging problems for investors and company executives is cash, too much cash.

According to Standard and Poor's, cash on hand at the nonfinancial S&P 500 companies will top half a trillion dollars for the first time ever by end of this quarter. While it's only an estimate, because not all companies have reported yet, so far, with 193 companies already in, cash and short-term equivalents is up 17% over the first quarter of 2003, which itself was up 25% over 2002, according to Howard Silverblatt of Standard and Poor's.

How much cash is there? Think of it this way: Microsoft, with $51 billion in cash, could give 51,000 entrepreneurs $1 million to start new businesses.
***
Behind the rise in cash are surging revenues amid still-stringent cost containment. Meanwhile, companies have been paying lower taxes, both part of the Bush tax-cut plan along with increased use of loopholes. Corporate taxes as a percentage of gross domestic product in 2003 were just 1.2%, their lowest level in 21 years.

Full blog article:
http://skimble.blogspot.com/2004_04_25_skimble_archive.html#108333616246752907
(WSJ is by subscription, so no direct link there)

Gee, what should they do with all that money? Hire people? Boost salaries? Or send out huge honking dividend checks to major shareholders (could be time for execs to cash in those stock options) -- and hey guess what? Dividends are tax-free now!

What will they do. What will they do? (/sarcasm) :argh:

[74dodgedart]

1. We need more taxcuts!!

[Vickers]

7. Yes! More tax cuts, more executions, less abortions!

Good grief, let's fix this mess, pronto!

(/sarcasm)

:P

[pansypoo53219]

2. so much

for that trickle down part.

[leftyandproud]

3. well, interest rates are still low...

cheap mortgages are still out there.

500 billion sitting in the banks will do that.

[JHB]

4. Of course, lousy pay will keep you from being able to afford...

...anything you can get that cheap mortgage on.

[JHB]

5. You have to remind people: the top is a sponge...

...it'll only trickle down if it's SQUEEZED.

[Squeech]

6. Hey, this really is a problem!

Consider what this really means: in the opinion of the select group of people (ha ha) who have the best understanding of how the American capitalist system works,

***there is nothing worth investing in right now***

In other words, the people who really know business and the market don't believe there are any growth opportunities to speak of-- at least, none they think would be worth making any monetary commitment.

This ties in with something else I've been worrying about lately. Obviously one of BushCo's biggest problems in November is jobs-- specifically the loss of 2 million plus of them over the span of his term. Equally obviously, many of BushCo's staunchest supporters are corporate honchos, i.e. people who are in a position to do something about the jobs problem. I can't see why Rove hasn't already called them all up and said, Okay, you've donated all you legally can to us already, but if you still want to help us, for God's sake ***hire somebody*** -- that's what I'd do in his shoes. And I can't imagine why the CEO's aren't smart enough to figure that out for themselves. But either they haven't, or-- the worrisome part-- they think their firms are already in deep enough shit that they can't afford to take on more head count, even to save their precious tax cuts.

Or they could collectively be dumb as mud fences-- but somehow I doubt that would apply to all of the Fortune 500.

[74dodgedart]

11. Buffet is heavily invested in foriegn currency

says he can't find good investments in US..

"investment creates jobs" -- Bush

Too bad none of them are in the US

[CWebster]

8. Oh, don't you worry

Even though 60% of American corps don't pay taxes, Kerry is going to offer them another tax break to discourage them from shipping your job overseas!

[Squeech]

9. The other thing about too much cash

is it makes your firm a takeover target for bigger firms with shakier balance sheets. And the last thing the economy needs right now is more consolidation-- more debt, more layoffs, more oligarchy.

[AP]

10. They're waiting for Great Depression II so they can buy up all the...

...devalued assets out of bankruptcy and then REALLY have total control of America.