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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#51

Post by tamana »

phkahler wrote: post #36

The economy grows and you get inflation when interest rates are lowered. It shrinks and you are likely to get deflation when rates are raised. The rate lever was getting reduced over the last 30 years and is not at zero. Anyone can see the only way for rates to go is up, and the value of cash is likely to increase in the near future. I honestly don't see any need for mystery in that. There's also the notion that a co…

What's the point of stabilizing stock, price, when instead you can just have cash in bank plus an unstable lowe price stock?

Re: Why Are Corporations Hoarding Trillions?

#52

Post by forgetsusername »

vetinari wrote: post #38
forgetsusername wrote: post #28

Earlier quoted context omitted.

Why is it that people always talk about only one side of the accounting ledger? The US has a net worth of nearly $150 trillion dollars. Who cares about the absolute value of debt?

That $150 trillion - is that book value, or fair value?

I assume it's a combination of both; I very much doubt that all ~$250 TRILLION in assets are being marked-to-market.

And, being as how both assets and liabilities will use the same accounting measure, I don't think it matters.

Re: Why Are Corporations Hoarding Trillions?

#53

Post by lmm »

fennecfoxen wrote: post #29
ryandrake wrote: post #19

Looks like the TL;DR of this article is: "Corporate leadership, being so much smarter than the rest of us dummies, sees something big on the horizon coming. They're saving all their cash so they can later invest because "the next transformative innovation could be just around the corner". Apparently they're smart enough to hoard all this cash, but not smart enough to know exactly what that transformative innovation i…

As a corporation, the traditional thing to do with cash you don't need is to return it to your owners, either through dividends or through share repurchases: If the owners wanted to own money sitting in a bank account, they could put the money in a bank account themselves. If they wanted to own a company, they'd be better off owning just the business part without a chunk of low-return cash attached. Beyond basic liqu…

Could they just be trying to put off paying their taxes until a Republican gets elected and lowers the rates?

Re: Why Are Corporations Hoarding Trillions?

#54

Post by vinceguidry »

apaprocki wrote: post #15
vinceguidry wrote: post #9

Earlier quoted context omitted.

It's not risk-less, but it's way less risky than every other alternative.

Possibly only if you are operating in a single market. If you have currency/soverign risk because you are selling in 100 countries, it's way more complex. I bet Apple doesn't consider all the rubles they have from their operations in Russia as less risky than parking it in US treasuries. The problem is getting it there...

> I bet Apple doesn't consider all the rubles they have from their operations in Russia as less risky than parking it in US treasuries.

They certainly have somebody looking at it.

There's more than one component to risk. Sure, holding rubles in a Russian bank is risky, but that risk isn't really of losing your whole pile all at once. So you have time to leave your position if it gets more dangerous.

Re: Why Are Corporations Hoarding Trillions?

#55

Post by simonh »

mschuster91 wrote: post #12

> Remarkably, the United States government was able to tax all that productive corporate behavior so much that it came close to paying off all its debts for the first time in 160 years. The current US debt is over 18.900.000.000.000 $ ( http://www.usdebtclock.org/# ). Am I getting the author right that the US managed to put on 18 B $ in 20 years?!

Not really. It's a bit partisan on tone, but the actual debt graph on this article is interesting. Basically there have been three big changes in direction for US national debt since WW2. Sharp upturns on Reagan and George W's watches, and a strong downturn under Clinton's.

http://zfacts.com/p/318.html

Re: Why Are Corporations Hoarding Trillions?

#56

Post by bztzt »

ryandrake wrote: post #19

Looks like the TL;DR of this article is: "Corporate leadership, being so much smarter than the rest of us dummies, sees something big on the horizon coming. They're saving all their cash so they can later invest because "the next transformative innovation could be just around the corner". Apparently they're smart enough to hoard all this cash, but not smart enough to know exactly what that transformative innovation i…

Aren't your two paragraphs really two ways of saying the same thing?

Re: Why Are Corporations Hoarding Trillions?

#57

Post by tamana »

tyingq wrote: post #14

This article does a good job of explaining: http://www.dailyfinance.com/on/corporations-cash-hoard-trill... Some interesting excerpts: "Four of the top five holders of cash are tech companies ...who together possess...about 23 percent of all cash owned by corporate America today. Overall, the tech sector controls more than half of such cash" "about 60 percent of [non-financial corporate] cash piles are offshore and s…

The simple answer is that these companies have leveraged the immense economies of scale in their info-tech niches, and are soaking up billions of consumers' money but there's nothing else for them to buy.

This is the sort of purchasing power imbalance that caused the Great Depression. The good news is that even if Depression hits, we still have access to web apps.

Re: Why Are Corporations Hoarding Trillions?

#58

Post by golergka »

forgetsusername wrote: post #34
golergka wrote: post #11

What the CEO and upper management of these corporations say about this? Surely, they were asked about this by shareholders?

> Surely, they were asked about this by shareholders? Except it's the hot, new Silicon Valley thing to structure your company as to not give your shareholders any power or voting rights.

But the worst offender they list is General Motors.

Re: Why Are Corporations Hoarding Trillions?

#59

Post by quinnchr »

jimrandomh wrote: post #23
mschuster91 wrote: post #12

> Remarkably, the United States government was able to tax all that productive corporate behavior so much that it came close to paying off all its debts for the first time in 160 years. The current US debt is over 18.900.000.000.000 $ ( http://www.usdebtclock.org/# ). Am I getting the author right that the US managed to put on 18 B $ in 20 years?!

No. In the 90s, there was a brief period where the US managed to not have a deficit (ie, it was taking in as much as it was spending). The US has never eliminated its debt, nor should it; that would essentially mean withdrawing the US dollar from circulation.

Actually, for a brief period under Andrew Jackson's presidency we did pay off all our debt.

Re: Why Are Corporations Hoarding Trillions?

#60

Post by theandrewbailey »

542458 wrote: post #18
mschuster91 wrote: post #12

> Remarkably, the United States government was able to tax all that productive corporate behavior so much that it came close to paying off all its debts for the first time in 160 years. The current US debt is over 18.900.000.000.000 $ ( http://www.usdebtclock.org/# ). Am I getting the author right that the US managed to put on 18 B $ in 20 years?!

Yeah, I'm not sure what the author was trying to say there, because that's not even close to true. The US wasn't getting anywhere near to paying off the national debt in the 1990s. https://en.wikipedia.org/wiki/National_debt_of_the_United_St...

Debt, especially public debt, went down substantially for the first time in decades in the 1990s. Debt-to-GDP went down about 15%. https://en.wikipedia.org/wiki/File:USDebt.png

Had partisan politics not destroyed the progress, public debt would be almost gone in 20-30 years.

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