Companies sitting on record pile of cash (could pay 2.4 M people $70,000 for 5 yrs) yet won't hire

[JohnWxy]

http://www.usatoday.com/money/companies/2010-07-28-cashcows28_ST_N.htm?loc=interstitialskip

Anyone wondering where all the economy's jobs are might want to look into piggy banks of the world's biggest companies.
Cash is gushing into companies' coffers as they report what's shaping up to be the third-consecutive quarter of sharp earnings increases. But instead of spending on the typical things, such as expanding and hiring people, companies are mostly pocketing the money and stuffing it under their corporate mattresses.

Non-financial companies in the Standard & Poor's 500 have a record $837 billion in cash, S&P says. That's enough to pay 2.4 million people $70,000-a-year salaries for five years. For context, 2.2 million to 2.8 million jobs were saved or created by the $862 billion stimulus that President Obama signed into law in February 2009, according to a report released in April from the Council of Economic Advisers.

Rather than investing in their future, companies are piling up cash and collecting practically zero interest on the money, hoping there will be a better time to invest later.
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This is why the GOP's sabotage of the recovery is working. Repubs often say businesses don't like uncertainty. Well, how about the uncertainty caused by the GOP constantly fighting stimulus bills and Unemployment benefits extension? That certainly creates uncertainty re the recovery in the minds of businesses. Thus you have large businesses with enough cash to hire 2.4 million people for 5 years at $70,000 per year!

[JuniperLea]

1. Trickle down, Reagan, VooDoo Economics do not work...

Can we learn this now?

I can't believe I'm feeling compelled to quote George H.W. Bush as a voice of reason in this! That is just how whacked out we are.

[DJ13]

3. It *DOES* work

If you're in the top 10%.

[JuniperLea]

5. Perspective is everything!

Indeed... it works quite well, and precisely as designed. It was never presented that way, but, well, you know...

[JohnWxy]

4. No need to quote Bush - The GOP know what they are doing. Keep the stimulus size down & in doubt

They demanded much of the first stimulus be in tax cuts to get their cooperation (tax cuts are not stimulating when people are worried about losing their jobs. they just save the cuts or pay down debt, but it will not lead to additional job stimulating personal spending) -- then, when the Dems took one third of the stimulus and changed it to tax cuts - the Repubs still didn't vote for it (well a total of 3 Senators did). but they had done the damage. There opposition reduced the stimulus by a third.

Actually, they reduced it more than that because many wanted Obama to go for a much bigger stimulus, but he in an effort to get bi-partisan support kept it to a size that many tried to tell him was too small to be effective. We were (and are) in teh biggest economic disaster since the Great Depression. That's why this Deregulation Disaster is being called the "Great" Recession.

Since then, the Repubs have kept up their sabotage of any recovery by voting against every additional stimulus bill and every extension of unemployment insurance (which MOODY's has said is one of the most stimulative expenditures there is). This keeps the continuation of stimulus fiscal policy in doubt.


And its working. Thus, businessees are sitting on RECORD amounts of cash.

[Oregone]

2. Why would they hire? There is no demand for their goods or services to justify it

We are stuck in a cycle here that the private sector, on its own, is going to take a long time fixing (invisible hand or not)

[lostnfound]

13. Little 'consumer demand' even though there's a ton of real NEED. What's wrong with this pic?

Everyday as I drive to my office in a skyscraper, over potholes and ugly city streets, past the homeless and the barely housed, I think about the fact that there is so much real need out there, and yet America's armies of educated upper class are devoting their lives and their attention to ways to make more money for their shareholders.

I arrive at the building with marble floors and grand lobbies decorated with mirrors and giant potted plants, and I think about the classrooms which exist in temporary buildings elsewhere in our city and the kids who live in rundown cramped apartments. How many millions devote their days to spreadsheets and/or memo-writing, for the sake of the shareholders? Shareholders whose wealth grows decades after decade,e even though the only investment that capital ever made in a particular company may have been made 50 years ago...?

[notesdev]

6. Why would you invest that money...

... only to see it stolen?

As long as Wall Street is allowed to run rampant and to ignore all our laws, who in their right mind would expose a dime to them?

This economic paralysis is the direct result of the failure to enforce the rule of law - make no mistake about it. And the first step in recovery is beginning to enforce the law. The major reason the US was exceptionally vibrant economically was that we had the strongest legal system in the entire world. Now we have a farce and a sham, barely veiling a relentlessly predatory economic environment.

Of course companies are going to hunker down and save what they can. Individuals are doing it too, en masse.

[jtuck004]

7. As stated, we have to have demand. Business is not going to hire

utnil they have products to sell. Consumers are not going to spend until they have less debt. Foreign companies
invested here (trillions) when they could get a better return, but now they can get a better return in developing
countries.

That leaves government intervention.

'Course, a lot of that money would simply go to China, so we also have to rebuild the country, rebuild mfg, re-educate and retrain workers. Even then it is not clear where our markets would be except where we can beat others with better technology, like perhaps the locomotives of Erie.

Not going to be easy at all, but otherwise it is game over. Unless someone sees some new tech, chemical, something big, on the horizon that doesn't seem apparent. Cars might have to all go electric, which would be huge, if oil goes nuts. We could be moving toward replacing part of our oil with alternatives. Protectionist measures likely would just give other countries a reason to work around us, and there is some of that going on today.

C'mon congress, get a WPA going...

[JohnWxy]

8. That's why Obama very intelligently tried to put as much stimulus of new "green" technologies in

the stimulus as he could. Of course, the Republicans fought this, called it Liberal agenda stuff (I forget the exact words they used). There would have been more of this but to try to get Republican cooperation, so some of this was taken out of the ARRA. Of course, in the end, the Repubs voted against it anyway (3 GOP Senators did vote for it). Ha-ha! Jokes on you Obama (and America).

http://www.treehugger.com/files/2010/07/stimulus-bill-create-1-million-green-jobs-cea.php

It's kind of amazing to me the bad rap that the stimulus bill has gotten since its passage a year and a half ago -- a recent poll found that something like only 13% of Americans felt it helped them. Of course, much of the nation's disdain can be attributed to the fact that the recession still hasn't lifted, that the stimulus failed to lift employment figures as high as was hoped, and that Obama's political foes have seized onto an 'out-of-control-spending' narrative. But the stimulus has done a number of very good things, like preventing all-out depression and pushing clean energy development. Here's just how much the stimulus has helped:

The recently released report from the Council of Economic Advisors (CEA), has found that the stimulus bill (the American Recovery and Reinvestment Act) saved or created 2.5-3.6 million jobs. And it revealed that nearly 1 million of those were jobs in a field relating to clean energy.

Needless to say, with the unemployment rate hovering around 10% still, those numbers certainly are far from a slam dunk. Many economists felt that the stimulus bill should have been much bigger and more robust(my emphasis_JW) -- and we're seeing why right now. But credit should be given where it's due, and ARRA did succeed in staving off the worst of the recession. If there's any true silver lining to be considered, it belongs to the investment in clean energy, energy efficiency, and research & development on a number of green fronts.

Here's http://climateprogress.org/2010/07/18/recovery-act-jobs-clean-energy/#more-30050">CAP with a breakdown of the green spending in the stimulus:




•$29 billion for Energy Efficiency, including $5 billion to pay for energy efficiency retrofits in low-income homes;


•$21 billion for Renewable Generation, such as the installation of wind turbines and solar panels;


•$10 billion for Grid Modernization to develop the so-called "smart grid" that will involve sophisticated electric meters, high-tech electricity distribution and transmission grid censors, and energy storage;


•$6 billion to support domestic manufacturing of advanced batteries and other components of Advanced Vehicles and Fuels Technologies;


•$18 billion for Traditional Transit and High-Speed Rail;


•$3 billion to fund crucial research, development, and demonstration of Carbon Capture and Sequestration technologies;


•$3 billion for Green Innovation and Job Training to invest in the science, technology, and workforce needed for a clean energy economy;


•about $2 billion in Clean Energy Equipment Manufacturing tax credits.


The CEA estimates that 827,000 jobs will have been created by the above measure over the course of the stimulus' enactment. Here's a chart showing the breakdown of general job creation:
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[jtuck004]

9. And yet, we still have 15,000,000 unemployed, 15,000,000 underemployed

1.5 million out of their homes and another 2 million coming, and multiple projections from both
private and government sources for a very good possiblity of even higher unemployement till out near 2021.

So perhaps they need to quit sitting on their laurels and get something new going.

The idiots that are "bad rapping" on the stim bill should be ignored. They are wrong.

But it wasn't enough. Not nearly enough. Not NEARLY enough.

[OHdem10]

10. They (businesses( would say I have to see signs there are going

to be enough customers to buy or use my product.
We are not going to hire people and just make work
for them. Our responsiblity is to our shareholders
and no one else, we are not going to waste money
hiring people we do not need..

This is why the Republicans are so hypocrical. They
keep yelling about the Dems and job losses. Even
if they win, it will be no different for them.

No one is ready or willing to admit we are in a long
long long term correction as a result of Globalization.
This is why the first stimulus should have been larger
and directed at Public 'Works--jobs. During a correction
the government should provide jobs, get the infracstructure
repaired, improve HC delivery, improve schools.
This keeps money circulating through out all levels
of the economy until the real economy recovers and
then the Private Sector takes over hiring./ The Government
jobs go away at that time.

No stimulus spending means everything comes to a standstill.
Yes Some Business continue on with some people working while
over half the country go from Middle class to working poor.
While the working poor fall in full blown poverty and the
people in poverty become a permanent underclass.

[hootinholler]

11. "hoping there will be a better time to invest later"

Like after labor costs have deflated?

:shrug:

-Hoot

[Ruby the Liberal]

12. Unreal. So on the one hand, they are crying about credit drying up

and on the other, they just magically hope that people will buy their goods and services without hiring their own people (who would then become consumers themselves).

It is all one big game of 'who blinks first'.