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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#381

Post by Houshalter »

RobertoG wrote: post #378
Houshalter wrote: post #371

Earlier quoted context omitted.

But that doesn't create demand, it just shifts it to the next year. That's not what the parent comments are talking about. And there is no need for the government to be involved in that either. If there was really predictable price fluctuations between years, investors could make money buying up commodities on good years and selling during bad years (and they do.)

It's not me who said that it created demand. The grandparent suggested it. I just said that it have been used successfully as a way of buffering prices, without the need of burning anything, in comparison to this "creative destruction" that he sees as necessary.

Well if you don't burn it, then you have to sell it at some point. When you sell it, you decrease demand. So it can work to stabilize prices, but it isn't going to stop a recession.

Re: Why Are Corporations Hoarding Trillions?

#382

Post by RobertoG »

Houshalter wrote: post #381
RobertoG wrote: post #378

Earlier quoted context omitted.

It's not me who said that it created demand. The grandparent suggested it. I just said that it have been used successfully as a way of buffering prices, without the need of burning anything, in comparison to this "creative destruction" that he sees as necessary.

Well if you don't burn it, then you have to sell it at some point. When you sell it, you decrease demand. So it can work to stabilize prices, but it isn't going to stop a recession.

Obviously I'm not explaining myself very well. I will make a last try.

The comment I was answering, talked about a government buffering mechanism as something wrong and destructive (burning real wealth). I just pointed that this kind of mechanism is not necessarily destructive.

In the next paragraph he proposes that the only way to go out of recessions is the "creative destruction" of capitalism. This is effective destruction of real wealth. It seems, that if the markets decide to destroy real wealth, then it's OK.

My answer was only about that and I was not saying that the buffering mechanism created demand.

Interestingly enough, even if I was not claiming anything about that before, there is a buffering mechanism that would create demand, and keep inflation in check: Job Guarantee as a buffer mechanism of jobs.

http://www.epicoalition.org/docs/buffer_stock_employment_mod...

I am not totally convinced about the idea myself, but I think it deserves more attention

Re: Why Are Corporations Hoarding Trillions?

#383

Post by splintercell »

mirimir wrote: post #359
splintercell wrote: post #324

Earlier quoted context omitted.

> Where do we get the money from? It doesn't really matter, there's plenty of it sloshing around. That's like saying "Restaurants have food, and there are homeless people in the city, so why can't we distribute the food from the restaurant to hungry homeless people in the city?". If you were to distribute foods from the restaurant to the hungry people in the city, then these restaurants won't produce that food, becau…

I used to manage a restaurant. All unmarketable but edible waste went to homeless shelters. Remaining inedible but unspoiled food went to pig farmers. Remaining spoiled food went to composting facilities. Our target market loved all of those policies.

I know someone would talk about the wasted food in a restaurant when I am talking about the non-wasted food.

Re: Why Are Corporations Hoarding Trillions?

#384

Post by complexmango »

rchaud wrote: post #227
perlpimp wrote: post #77

Earlier quoted context omitted.

If to follow buffet's cues, it would be smart to save when valuations are huge so you can make acquisitions on the cheap side when correction moves through.

In Buffett's day, value investing made a lot of sense and allowed Buffett to put out wise-sounding soundbites like "I don't invest in what I don't understand" and helped shore up the folksy image of Berkshire Hathaway, who owned ostensibly uncomplicated companies like Heinz. But today we live in a world where the way to make money is through regulatory arbitrage (Uber) or startups chasing risky business models. Addit…

Sorry but no. It ALWAYS makes sense to sell high and buy low, even if you're buying the exact same company. In other words, just find one value play if you want, and follow the cycle.

The skill is in determining what high and low is - i.e. you do need to have a sense of what the asset is worth. The easy answer is - figure out what its worth to you. i.e. what level of earnings or dividend does it seem attractive, and then accordingly, what is too cheap and what is too expensive. Obviously, take into account debt and other liabilities if you can.

That's why its necessary to understand the basic business model.

The tricky part is the temperament to do nothing when others are in a frenzy. Only a few transactions in your entire lifespan will determine the vast majority of your performance.

Re: Why Are Corporations Hoarding Trillions?

#385

Post by softawre »

seiji wrote: post #120
markdown wrote: post #110

Earlier quoted context omitted.

And what good is a large population of people in their peak consumption years if they have no money with which to consume? So long as you have a low-paid workforce who have to save their money (either themselves or via insurance companies) in case they get an infected tooth or need to see a doctor for an antibiotic prescription, you'll have low consumption spending and low growth.

even medium to highly paid workforce members aren't entirely capable of spending en masse these days. I'd love to stop paying $3500/month in rent, but any property to buy around here has a median price of $1.2 million. Unless we all move to rural Indiana, housing + healthcare is designed to eat 100% of your after-tax income with no room for further growth. (of course, that's assuming you're just a putz serial employe…

Hey, I live in Indiana! I'm hiring a full-stack software engineer if anyone wants to get in on the 2500 sq-ft homes for 200k.

Re: Why Are Corporations Hoarding Trillions?

#386

Post by littletimmy »

ryanlol wrote: post #256
littletimmy wrote: post #254

Earlier quoted context omitted.

And in those countries too, businesses need the government.

And? I think you're missing the point here, US double taxing foreign income would put everyone else at an insane competitive advantage.

Really? Other countries don't have taxes?

Re: Why Are Corporations Hoarding Trillions?

#387

Post by ryanlol »

littletimmy wrote: post #386
ryanlol wrote: post #256

Earlier quoted context omitted.

And? I think you're missing the point here, US double taxing foreign income would put everyone else at an insane competitive advantage.

Really? Other countries don't have taxes?

I'm not sure you follow, we're discussing double taxing here.

Re: Why Are Corporations Hoarding Trillions?

#388

Post by SilasX »

rayiner wrote: post #289
charlesdm wrote: post #239

Earlier quoted context omitted.

I'm all for higher taxes on capital, maybe with some exceptions on the amount of capital gains tax to pay on your first €10m. But honestly, a wealth tax is just demotivating. Not every wealthy person invests their new found riches. It makes sense only to tax gains from investments, but only gains. Not making money on your capital? No problem, you don't pay. If you are, you do pay extra tax. I don't even think it's a…

I think wealth is a very natural thing to tax. The state creates and guarantees to protect a property right in land/personal effects/corporate equity/etc. In return, it taxes you 1-2% of the value of that property right each year.

Doesn't seem natural to me, in that most wealth is indivisible, non-fungible, etc. It's the "oh, just give me half the baby" problem writ large.

That said, land value tax and seigniorage seem like the best taxes on many metrics.

Re: Why Are Corporations Hoarding Trillions?

#389

Post by [deleted] »

guyzero wrote: post #103
fennecfoxen wrote: post #29

Earlier quoted context omitted.

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…

Tech companies specifically have seen their historical predecessors disappear very quickly - Sun and SGI nearly evaporated, IBM has had 16 quarters of shrinking earnings. So tech company execs hoard cash in the hope that if they get blindsided they'll have time to recover. I'm pretty sure this is Eric Schmidt's explicit strategy. Also, as someone else noted, a lot of this cash is "trapped" overseas as it would cost 3…

[deleted]

Re: Why Are Corporations Hoarding Trillions?

#390

Post by undersuit »

reddytowns wrote: post #263
asift wrote: post #207

Earlier quoted context omitted.

That often cited minimum wage statistic also just so hapens to start at a time when minimum wage was near it's all time high on an inflation adjusted basis. Why do you suppose that is? A basic income is a far better solution than our current mess of bureaucratic welfare programs that are both inefficient and rife with harmful unintended consequences for those they intend to support. Milton Friedman's "negative income…

One thing I don't understand about basic income is how to deal with children. If the parents get the basic income of a child, then that will incentivize some people to have more kids simply to get more money. If you don't give basic income for kids, then people with a lot of kids won't be able to live. Of course, you can adjust the amount between the too extremes of full basic income and no basic income for kids, but…

My ideas of basic income always end up with the first implementation of basic income to be an amount of money just barely above what is needed to keep an individual above poverty. We have to ease society into this transition, and just like we shouldn't give the BI in one lump yearly sum(especially since most basic income proposals include almost completely gutting other safety nets) we shouldn't make perverse incentives to collect additional BI by neglecting their children.

Maybe for the first 20 years of the program every child affords a parent some additional BI based on the child's age. Raising a child when health care is inexpensive(my vision of BI does include pretty much free health care), job's are optional, and schooling is free makes the most expensive times to be early in the child's life when they are constantly outgrowing their clothing and beds and using up diapers at an impressive rate.

Eventually the amount of BI awarded becomes sufficient for most family situations(Star Trek post-scarcity style) or other factors like perfect birth control allow us to remove the child BI bonus.

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