CEO: No need to invest right now

[ProSense]

CEO: No need to invest right now

by CalculatedRisk

"I could borrow $2 billion tomorrow for 3 1/2 percent. But what am I going to do with it?"

David Speer, CEO of Illinois Tool Works which has 60,000 employees worldwide in more than 800 business units and $14 billion in sales.

The above quote is from an article by Neil Irwin in the WaPo: With consumers slow to spend, businesses are slow to hire

There is no reason to invest when there is excess capacity in most industries (and excess supply in housing). This excess capacity or lack of demand - and therefore lack of new investment - is a key reason why the recovery is sluggish.

More from the WaPo article

CHICAGO -- Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments -- the missing ingredients for a strong economic recovery.

<...>

They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of almost unbroken prosperity of the quarter-century that preceded the financial crisis.

Across the industrial parks and office towers of the Chicago region, in a more than a dozen interviews, senior executives said they see Americans for years ahead paying down debts incurred during the now-ended credit boom and adjusting spending to match their often-reduced incomes.

<...>

Executives see little evidence that the economy is slipping back into recession. But they describe a business environment in which sales come in fits and starts and their customers can't predict what they will want to buy in the future.

<...>

So as a condition to hiring, these CEOs want people to spend money they don't have until they're in debt over their heads to support executive compensation in the tens of millions of dollars plus perks while they also demand more tax breaks and incentives from government?




Edited missing word.

[Dawson Leery]

1. They are deliberately holding back.

FDR knew what to do in this situation.

[seattleblue]

12. Really? What did he do?

[Dawson Leery]

16. Raised taxes on the wealthiest and corporations

and used those funds to pay in part for the massive public works projects which put Americans back to work.

[seattleblue]

17. Actually none of that happened.

FDR did not attempt to raise income taxes until American involvement in WW II. Roosevelt proposed new taxes on corporate savings in 1936–37 but it was rejected by Congress. Unemployment never really dipped significantly in the 30s and only improved once U.S. participation in WW II started. Unemployment was 23.6% in 1932 and 19% in 1938. It went down to 14.6% in 1940 as U.S. factory production ramped up to support the Lend Lease effort to help England. http://www.infoplease.com/ipa/A0104719.html#axzz0xIBdgvQ0

[dkf]

18. Nice history lesson.

Thanks.

[RandomThoughts]

2. Haha, and they are free game now.

Yippy Ki AAAAAAAAA


LOL


Draggin' The Line- Tommy James
http://www.youtube.com/watch?v=784m9_bcVBE

[rasputin1952]

3. Most of these clowns are hard core R's...

They will sit on their cash as to opposed to helping the consumer by investing in new business. These people could care about us, they see as nothing more than people to be fleeced at every opportunity. When one adds the corporate breaks these entities get from tax savings to increased profits from increased demands on the workers...and then "blame" it all on "Class Warfare".

You BET this is Class Warfare!

[ProSense]

10. Yup, it has been

clear for a few months that they were sitting on cash. Now, they finally admit why: it's political.

[Pirate Smile]

22. I know. They don't want it to get better before Republicans take control of Congress so they can

get their tax breaks continued. Gawd, they make me sick. It is just like how the Republicans decided even before Obama was inaugurated to try to block & stop everything. They didn't want a big recovery because it would help Dems and hurt Republicans long & short terms so all those Americans desperate for jobs and help, well, Republicans truly don't give a damn. Instead they say - hey, look, brown people sneaking over the border or brown people trying to pray to some other God in your town, be afraid, only we can protect you.

They have no sense of community or common interest. That did shock me a little bit right after he was inaugurated. We were heading off a cliff and they refused to do anything to try to stop a crash.

[LatteLibertine]

4. As far as

Wall Street goes, they don't invest because gambling with folks pensions is more profitable.

President Obama should lend directly to small business and skip the banks altogether. They'll pocket the money and or just gamble with it.

[tridim]

5. Hmm.. Better give that fucker another massive tax cut, and right quick.

Corporations are destroying everything, on purpose. Why?

[TheKentuckian]

6. In the end, this is going to have to get drastic and people seem to have more stomach for poverty

than saying, "NO MORE!!!", so were kinda jammed here.

The path we are on is unsustainable and the resource pool is so heavily tilted that no amount of tinkering had even a remote chance of creating balance.
There is no time for some generational drift to balance nor is anything being done to even gently nudge it in that direction at any rate.

The credit faucet had been shut off and/our maxed out as wages and employment levels are declining. There is nothing to sustain the people and we have no way to prime the pump.

[AtomicKitten]

7. Well that explains a lot.

Corporations apparently think holding a gun to the head of America to extend/make permanent the Bush Tax Scheme for the Rich is going to work.

[thelordofhell]

8. Thank you Supreme Court

Now these bastards are holding on to their money so they can give to their republican zombies.

[freebrew]

9. ITW

is the worst offender in getting rid of older workers, finding ways to offshore labor and flat out ruining businesses they take over.

I was unfortunately one of their victims. They hold monopolies on food service equipment, welding equipment and as of late, PC industry equipment. They make each and every company they take over a cookie-cutter type organization. The same business philosophy for all.

I would really like to meet this asshole in a dark alley somewhere, he(his organization) has cost many friends of mine to be prematurely out of work and promoting the biggest idiots in the company to positions they can't handle.

[AngryAmish]

11. Seize these companies from the wreckers and saboteurs

[Milo_Bloom]

13. Huh?

Is this supposed to be some revelation? Why would a business expand or hire more people if there isn't enough demand?

Obviously this should be used as evidence to stop corporate welfare, but no one is taking any real steps to do that.

[flpoljunkie]

14. Obama called for National Infrastructure Bank in his budget this year.

A National Infrastructure Bank would create jobs and put companies like Illinois Tools Works to work. However, Congress has yet to pass a budget resolution for fiscal 2011.

WASHINGTON
Feb 26, 2009

(Reuters) - U.S. President Barack Obama called for the creation of a National Infrastructure Bank in his budget released on Thursday, saying it would "expand and enhance existing federal infrastructure investments."

"The mission of this entity will be to not only provide direct federal investment but also to help foster coordination through state, municipal and private co-investment in our nation's most challenging infrastructure needs," according to budget documents.

The budget, which must be approved by Congress, requests $5 billion (3.5 billion pounds) for the bank in fiscal year 2010 which starts October 1, and anticipates that it will receive $25.2 billion from then through 2019.

For more than a year Congress has mulled creating what many have called a "Federal Reserve of Infrastructure," which would use seed money from the federal government to establish an independent board for giving capital project grants to state and local governments.

When meeting with U.S. governors in December before he took office, Obama said the bank would be a top priority. During his campaign, he said an independent bank should receive $60 billion over 10 years from the federal government.

http://uk.reuters.com/article/idUKTRE51P4KM20090226

[ProSense]

15. That would help. Here's the catch for those who want to blame it on demand

From the WaPo article:

Fundamentally, executives objected to Obama's policies on the grounds they would make the United States a less competitive place to operate in the long run.

But when Speer and other executives were pressed on the role that tax and regulatory policies play in hiring, they drew only vague connections. Speer said his decision whether to hire is driven primarily by demand for his products. Orders are coming in strong enough that he is running about 20 hours a week of overtime. So he is weighing whether to hire two or three additional manufacturing workers.

None of the executives interviewed linked a specific new government initiative with a specific decision to refrain from hiring.

Hire two or three more people and they have money to spend, and so on.

The fact is that people without jobs can't spend money they don't have. That is why unemployment benefits is considered a stimulus.

[boppers]

19. Double Dip.

They're worried about ramping up capacity and seeing another drop.

[lunatica]

20. Actually what they see is exactly what's going to happen

And in the end they will wither and dry up as we don't want their crap anymore. We want to get out of debt, and we don't want to get back into debt. We will adjust our way of spending our incomes. They will end up a mere passing phase of history, replaced by environmentally friendly businesses who have to live off their profits rather than become richer by hoarding their profits.

Life is changing for all of us.

[Odin2005]

21. Fucking parasites!

:grr:

[Arkana]

23. So CEOs are holding the economy hostage?

How on earth do we fix that, other than getting in a time machine, going back to 1789, and making Thomas Jefferson the architect of our economy?

[TheKentuckian]

25. You chop them off at the knees. You find reasons to prosecute them criminally

You send in Armies of regulators to go through them with a fine tooth comb and disrupt operations. You tax the crap out of the individuals. You enact tariffs. You pull back military protection from their critical trade routes and global locations.

And if that doesn't work then you play hard and dirty.

[KoKo]

24. K&R...