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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#91

Post by petercooper »

analyst74 wrote: post #43
mschuster91 wrote: post #10

Earlier quoted context omitted.

> It's the same reason I save my money: for opportunities when prices are low The problem is: how do you know if the time is right (i.e. ten years later you can say "I invested in the lowest possible price")? Possibility A: you invest too early, stock drops further and you can't recover in a reasonably long time frame (e.g. 1 year) Possibility B: you invest too late, and people who invested before you made more profi…

The trick is, you don't invest during the downturn, hence all the cash hoarding. You invest after it bottoms out for a while. Macro economies do not recover like a rocket, the window to invest is very large, so large that if you only recognized the bottoming out a couple years later, you still haven't missed the opportunity.

That is a really interesting point. So I've never invested in stocks before (preferring to invest in my own business) but have decided to diversify and am only seeking returns in a 5-15 year bracket (but want to minimize 1-5 year downside so it could potentially work as an extra emergency fund too).

I had assumed being 20%+ off of the highs, it'd be a good idea to start getting involved now, but.. maybe I should wait until a clear "bottom out" is showing?

Re: Why Are Corporations Hoarding Trillions?

#92

Post by nerfhammer »

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…

Dividends get taxed, hoarding money helps your price/book ratio.

Re: Why Are Corporations Hoarding Trillions?

#93

Post by greedo »

phkahler wrote: post #25
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?!

>> The current US debt is over 18.900.000.000.000 Am I getting the author right that the US managed to put on 18 B $ in 20 years?! Google image search: https://www.google.com/search?q=US+debt&biw=1217&bih=755&sou... Check this one: http://wolfstreet.com/2014/12/02/us-national-debt-jumps-181-... So not quite, but at the end of Clinton there was a small surplus. Bush looked at that surplus and said the following: 1) Th…

There was only a surplus if you included Social Security funds that are (IMHO) mistakenly considered general revenue.

Re: Why Are Corporations Hoarding Trillions?

#94

Post by jandrese »

Animats wrote: post #88

The US is out of demand. Workers are spent out. Thus, there's no need to increase output, because nobody has the money to buy it. The US has huge excess manufacturing capacity, thousands of malls which could handle more traffic ("there's always parking at Sears", a rather pathetic ad), and services which could handle more business. There's a glut of capital, plenty of available unemployed or underemployed workers, no…

This is the ultimate problem with "trickle down" economics. Capital doesn't drive growth. Lack of capital limits growth, but excess capital doesn't generate additional growth. Demand drives growth and 35 years of stagnant wages (wages are basically where they were in 1981) have put a chokehold on growth.

This is why you have the seemingly incongruous effect of high taxes encouraging growth and low taxes stifling it. Ultimately "high taxes" tend to effect the rich a lot more than the poor, and the money ends up being redistributed somewhat equally, spurring demand as the poor can suddenly afford a lot more good and services.

Re: Why Are Corporations Hoarding Trillions?

#95

Post by throwaway_1010 »

forgetsusername wrote: post #20
bobby_9x wrote: post #2

It's the same reason I save my money: for opportunities when prices are low. This is especially relevant now that the stock market is tanking. Most people with any kind of money think this way.

> It's the same reason I save my money: for opportunities when prices are low. So then you buy low, and no longer have money saved for even lower opportunities. The logic of this plan doesn't make sense. You can't both be saving for and spending on opportunities, and you have no way of knowing when or what opportunities might arise. > Most people with any kind of money think this way. According to...?

The logic of this plan is basic and has stood the test of time in any multi-party market. You can save and spend at the same time, I do it all of the time, it's called budgeting. You are mired in theoretical perfection, absolutism, and a misunderstanding of how to profit from investing or trading. On the Street this "plan" is referred to as "Keeping the Powder dry". You don't [rationally] blow the whole keg of powder on one trade. If I have $10k to invest, I might only invest ("fire", "blow", "shoot" )$2k at a current market/stock low and keep the rest "dry". What is your investment strategy? Invest at the market/stock highs?

According to...people that have actually invested. Some positions lose money, some make money, but you'll never know what it's like until you get off the bench and put some skin in the game. Always be comfortable with losing what you invested, because you might lose it. Always be comfortable with taking a profit, because you might lose it.

Re: Why Are Corporations Hoarding Trillions?

#96

Post by sgt101 »

Animats wrote: post #88

The US is out of demand. Workers are spent out. Thus, there's no need to increase output, because nobody has the money to buy it. The US has huge excess manufacturing capacity, thousands of malls which could handle more traffic ("there's always parking at Sears", a rather pathetic ad), and services which could handle more business. There's a glut of capital, plenty of available unemployed or underemployed workers, no…

a simple response would be progressive taxation. Tax assets, ideally non productive ones, and redistribute to the poor for use in non discretionary spending - like dinner.

A modern "new deal" for elder care would also do the trick..

Re: Why Are Corporations Hoarding Trillions?

#97

Post by mschuster91 »

jandrese wrote: post #84
mschuster91 wrote: post #73

Earlier quoted context omitted.

> and not one but two unfunded wars. Afghanistan was certainly a justified war, and Iraq was done under false pretenses and badly executed, but (if done right) it would have been worth the effort. Fighting oppressive regimes is always worth the price. The only thing that must not happen (yet again) is to fuck up the "what happens after neutralization of regime forces" part. Implementing a Marshall-like plan for Afgha…

One can argue that even with a Marshall-like plan the region was doomed from the start. The country is not homogeneous like a European nation or especially Japan. It is made up of several ethnic groups who all want to dominate/eradicate the others. The British carefully drew the lines in the middle east to make sure the powers there would never be a threat to their empire and would instead be forever embroiled in pet…

> The British carefully drew the lines in the middle east to make sure the powers there would never be a threat to their empire and would instead be forever embroiled in petty tribal rivalries and incessant power grabs. It also insures that whomever is in power doesn't care about roughly half of the country and will almost certainly be corrupt as hell.

And it wasn't just the Middle East where this happened, it's happened all over Africa too, and the big colonial powers - again the Brits, the Portuguese, the Spanish, Dutch and the Germans - all did their part in creating the clusterfuck the entire region is suffering from to this day.

Re: Why Are Corporations Hoarding Trillions?

#98

Post by vellum »

According to this Bloomberg article, companies have $2.1 trillion sitting offshore for tax reasons [1]. They're probably waiting for Congress to let them bring home the cash, tax-free. However, the last time that happened (2004), it was done to encourage companies to create jobs. Instead, they spent it buying company stock. [2]

1 - http://www.bloomberg.com/news/articles/2015-03-04/u-s-compan...

2 - http://www.theguardian.com/money/us-money-blog/2015/jun/13/r...

Re: Why Are Corporations Hoarding Trillions?

#99

Post by sgt101 »

chatmasta wrote: post #69

I'm surprised nobody has mentioned the geopolitical advantages of hoarding cash. A big pile of untaxed, uninvested cash represents a significant political bargaining chip for the corporation in control of it. Apple can extract more from negotiations with the US government, for example, when it's holding $100b USD offshore. Quite simply, that money is leverage. Over the next several decades we will see the decline of…

I think it's a liability. The US government can at any time tax that cash, and if Apples execs refuse to pony up then they can have fun in jail.

If the US government decide to do that....

Re: Why Are Corporations Hoarding Trillions?

#100

Post by aikah »

mschuster91 wrote: post #73
jandrese wrote: post #72

Earlier quoted context omitted.

#4 was really "tax breaks for the rich". The check everyone else got was just an early chunk of their normal refund check. Surpluses are a big problem to the "starve the beast" strategy though. The whole point is to run the government out of money so it is forced to reduce or shut down programs that are otherwise quite popular. That's why we implemented huge handouts to billionaires and not one but two unfunded wars.

> and not one but two unfunded wars. Afghanistan was certainly a justified war, and Iraq was done under false pretenses and badly executed, but (if done right) it would have been worth the effort. Fighting oppressive regimes is always worth the price. The only thing that must not happen (yet again) is to fuck up the "what happens after neutralization of regime forces" part. Implementing a Marshall-like plan for Afgha…

> Fighting oppressive regimes is always worth the price

Yes if there is a long term strategy in place. USA wasted billions on Iraq, it didn't make the middle more stable.

> Implementing a Marshall-like plan for Afghanistan and Iraq would certainly have led both countries to a richer life instead of the clusterfuck that both countries are now.

I don't believe that. The Marshall plan worked in Europe because despite all the nazi stuff, Europeans were somehow reasonable and could draw conclusions from their mistakes. Afghanistan, Iraq and co have a highly tribal culture, with a total different mindset than Europeans. The Talibans are still here, 14 years after and they still view the west as "the great Satan". Do you really think folks like these are reasonable? can they compromise ? I believe they cannot, that's their culture. No matter how much money one give these guys , unless there is a cultural shift, one is not going to achieve anything.

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