Comments on: Idle corporate cash piles up http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/ Sat, 23 Mar 2013 13:49:31 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: HelpPeople http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1675 Tue, 02 Oct 2012 20:53:00 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1675 The string of comments here are truly stunning. Many people here articulate that the government should take a company’s money because they have built a reserve. And the people on this website say that is fair and legitimate, because they are not helping someone else, like themselves. WOW! Talk about hypocrasy. As I read the posts, people feel enabled to take someone else’s possession, because they are down on their luck, or they know someone down on their luck, or maybe they feel their idea of social responsibility out weighs the fact that we are supposed to live in a FREE country, where people have rights. Rights to make their own decisions, like what to do with their own money. Face it people, the money is not yours! You want a say about what corporation does with its money, then become a shareholder. Don’t sit on the side line, trying legislate your control over other people/money. I guarantee that you would not appreciate someone telling you, to give your money to someone else. I run a small company. We are in the middle of an IRS audit. The IRS’ big concern is we have too much money in the bank. We have 5 to 6 months of revenue. To us, it is not enough. We would like a cushion to survive a downturn, and not have to layoff all of our people – but the dunderheads like the idiot who wrote the article above, would have you write your congressman to tax our reserve. We would like an opportunity to grow. We would like an opportunity to hire more skilled resources, and take a larger step forward. To do this, we would like a small safety factor. To us 6 months is a very short time in a business cycle. Clearly to people like Dunderhead Johnston we must be JP Morgan Chase. We are, as described by both parties, the fabric of America with less than 30 employees. Smart people realize that the more you pound small businesses down, the more you regulate them, the less chance that they will grow or survive. People stop asking for other people’s money, property, ideas, etc. Look at yourself, and find out why you were put on earth. Make your own way, most of us did!

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By: RocqueNRoll http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1624 Sun, 12 Aug 2012 17:07:43 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1624 Is it time to create incentives for businesses to invest the idle cash back into the business. (Remember the IRS did not have enough staff to enforce the foreign accounts rule hence the 2009 Amnesty Program.)
Lets create something like the 50-50-50 Plan for business capital investments e.g. a short term change to business depreciation rules to encourage businesses to buy stuff.

The change has three phases. In the first phase 50% of the cost of the item can be depreciated in the first year. In the second phase the balance is depreciated over 50% of the standard time period. In the third phase any equipment sold for more than the book value only has to treat 50% of the excess payment as profit.

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By: LEEDAP http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1588 Mon, 30 Jul 2012 19:20:16 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1588 It’s time to tax these corporations as Ronald Reagan confirmed we should. But it won’t happen in an election year.

The idea of raising the income tax on dividends but allowing it as a business expense to stimulate the disbursement of the cash reserves is not likely to stimulate our economy as much as taxing it and letting the government give it to the States where it will be spent on job creating activities. While much of the dividend income does go to retired folks, most of it is heald by the wealthy. Neither of these groups is suffering as badly as the young and middle-class unemployed and while it would be a bit of a stimulous it wont create as many jobs as State payments to teachers or road workers.

@NinjadeTokyo raises a good point that most funds are on foreign shores and are likely to be invested there. But investments are done with after tax dollars subject to deductions and exemptions, so the other purpose of the law is to stimulate US job growth. Also, it is understood that much of the growth of this cash is to park funds in a tax free account. The reason for this is that there really isn’t a safe place to invest this money. So it sits there unused until the economy gets better. This is a job killer. I say tax the exess cash and put it to use paying teachers and building the infrastructure of tomorrow.

I like @hogsmiles conspiracy theory. It may also be true for the Koch Brothers.

@PeterTenebraum, even if your debt load statement is true, Corporate debt is very cheap and manageable. given the extraordinary low rates, now is the time to go into debt. Your Keynesian statement is also false. The frequency with which money trades hands is a multiple that increases the money supply and is closely watched by monitarists. But, if you’re afraid of future inflationary pressures, then the best thing to do is to give the horded money to the Government so they don’t have to print so much and the corporations don’t have so much to spend when times get better.

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By: running http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1586 Wed, 25 Jul 2012 22:35:43 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1586 with the new law passed by congress this year, companies are getting wealthy by not paying into employee pensions

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By: Timelessman http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1585 Wed, 25 Jul 2012 19:15:24 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1585 This is why I sold 2/3 of my GE stock. They have over $100B in cash and equivalents, but are still not raising their dividend. We retired folks relied on generous GE dividends in the past, but after 2008 dividends plummeted from 0.31 to 0.10. It’s back to 0.17, but with all that cash they should be closer to 0.25 per share.

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By: paintcan http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1584 Tue, 24 Jul 2012 02:17:53 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1584 A@barfle: and that is exactly what the Republican Party has not wanted to happen because they want the government barefoot and prone, and would very much prefer that all those who depend on it drop dead as long as they get theirs. Am I too unkind? The biggest pigs at the Federal trough are always the rich and the well funded. Everyone else needs the government as the most reliable and usually most legally accountable and disinterested party available for long term concern for the general welfare. Most buisnesses – and especially the ever changing place names of the major international corporations – seem to be fly by night outfits, actually, however lush their corporate quarters. Every decade or so they seem to have name changes and identity crisis and rack up huge debts in merger and acquisition costs. It keeps people in money and I appreciate the value of negative numbers on a balance sheet.

I personally will never trust the honesty or integrity of a single business in this country again. I am too old and too poor to listen to the junk ads and business come-ons that fuel the doddering and fraudulent economy of this not so great nation and getting smaller all the time while it’s self inflating and, very frequently, bought with advertising dollars, puffs everything from politics to pampers. But when it puffs war it is a crime against humanity. It is murder for hire. It is paid for propaganda for the sake of converting some man’s blood into another man’s treasure. They preach a work ethic but don’t really mean it. They know that talk is for the suckers and anyone who can, builds a big pile of cash, anyway they can, and sits of it. They then spend inordinately amounts of time and money congratulating themselves on their bravery and hard work. People never tire of building gilded railings around their lives.

The major companies can’t seem to make sufficient employment so the government has to step in for everything they don’t want to support. That is the undertone of Mr. Johnson’s article. And that is the government we have had since the Great Depression. The rich as Truman Capote once said – “are the most frightened people on earth, because they cannot imagine living without large amounts of money”. Not an exact quote. They are the greatest addicts in a country of addicts.

I do appreciate the balance of powers but that appreciation only works when one is not suffering too noticeably. Otherwise it is a lesson in self reliance or toughing in out by people who frequently don’t meet the conditions of their own rhetoric either. I am not sure that anyone alive and/or writing in these pages actually does? And I many be too surly to appreciate it when I see it.

I think the ACA is an act of desperation and it tied the country – sick and well – to professional sharks. They should liken the Obama administration to Diocletian – the emperor who invented serfdom to save the last scraps of the dying empire. I am poor but I am also afraid to be rich. It is also so much harder to get off the ground.

I suppose debt and solvency are like bellows that fan the fires of the economy or starve them of oxygen. Just don’t get caught in the draft – in or out – of those damned bellows. The bellows opening is infested with bacteria that write CDOs and other very flimsy come-ons, or scams like Facebook that claim that ten percent of outstanding shares are a reliable indication of the value of the rest. I’m not a financial expert by any means but that is something I’d have rather not begun to understand: how the US economy can puff it’s own GDP with such flimsy vehicles of “wealth creation”. I hate the way it robs the bodies own efforts – of any consequence or value.

Does the US truly believe that derivative instruments are in any way something to believe, accept, respect, or have confidence in? And I don’t hoard gold – I am too poor. The money may all be an abstraction and intelligent people understand that to their bones, but the 99% may actually believe it means something tangible. 99% can be wrong. Lincoln thought one could fool all of the people some of the time – and that’s everyone. Some of the time may be enough to doom ships and states.

It’s enough to send one trolling through Ecclesiastes. But it’s too depressing.

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By: barfle http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1583 Sat, 21 Jul 2012 14:11:11 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1583 All this data serves to show is that the record cash piles these companies held going into the recession weren’t enough, and that the CEOs have now learned some lessons in building businesses sufficiently resilient to such crisis occurring again in future.

The recessions that we have endured in the past few years have led to record numbers of companies failing, record numbers of layoffs and historic levels of shareholder losses. Now that the markets are no longer pouring blood, it seems reasonable for shareholders to take stock, keep their options open (cash=options), and play wait and see.

If shareholders thought it unwise to leave such cash ‘sitting around’, they would be most vocal about claiming it back. Instead shareholders consider a safe low interest account to be a wiser investment than putting the business at more risk in what remains a very nasty environment. In essence, they have done what they are expected to do and what they should do.

What has always been clear is that government finances worldwide have been proven to be grossly inadequate going into 2007. Governments should be at the peak of their surpluses going into a recession, ready with their warchests to moderate the full blown impact of a nasty recession when it does occur. Instead worldwide they spent it and landed in a recession with the biggest fiscal hangover the world has ever seen.

Companies for their part took huge losses and had a lot of internal bloodletting after they screwed up, and shareholders took much of that hit. But when it comes to the public finances, politicians are blaming companies again? It figures. What a different recession it would have been had the US and other major governments built a tidy sovereign wealth fund before 2007.

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By: paintcan http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1582 Sat, 21 Jul 2012 13:32:39 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1582 Cash rich corporations living with balance sheets in the black versus the developed countries’ governments all living deep in the red seems exactly opposite the Chinese way of keeping the central government very wealthy and capable of investing wherever it cares to focus. It is obvious the Chinese can turn their attention to any kind of infrastructure improvements and business expansion they care to undertake.

I am almost convinced that the Chinese way is better in spite of their less liberal civil rights record. That can improve in China as the level of education rises overall in that society and as the people establish their own enlargement of scale and autonomy. But at least they are working and building the cities and towns of China in what appears to be a more modern and sensible way than this country did or ever can again. I fear we built our bed and will die in it no matter how inappropriate it is for changing global economic and environmental conditions.

BTW – A life in the corporate world does not guarantee the freedom of the individual. In fact – the prerogatives of the corporation trump many issues of civil rights and can make it harder to exercise those civil rights. The corporation has the ability to cut off any employees who do not value the corporate culture or it’s priorities. I am not talking about personal experience. More the sorts of case we call “whistle blowers”.

I have had very little time employed with corporate life and have spent most of my life as a small businessperson. But while working for one I found that books I was reading were being noticed and talked about while I was away from my desk. But no one ever talked to me about them while I was present. The social atmosphere was very little different than High school or, for that matter, China.

I won’t be at all surprised when China becomes the bastion of civil rights and individual freedoms and good standards of living while the western liberal societies all sink into bankruptcy and stagnation to become the 21st century’s feudal regimes. I am sure it can happen.

I take explore08 at his word. I am sure he is correct.

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By: explorer08 http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1581 Sat, 21 Jul 2012 00:31:30 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1581 Large corporation CEOs are really apolitical and amoral. Their two key drivers are shareholder value and executive compensation. That’s it and nothing else. There is no less patriotic group in America than corporate CEOs. They would NEVER invest their cash hordes to help the country because that would run counter to those two key drivers. A lot of CEOs wear an American flag as a lapel pin but, trust me, that is just theater, just for show. As a retired telecommunications executive I know exactly what I am talking about here.

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By: Kailim http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/#comment-1579 Fri, 20 Jul 2012 05:52:36 +0000 http://blogs.reuters.com/david-cay-johnston/?p=396#comment-1579 The business world is ruthless. Has any CEO not fulfilled the interests of the board and the major shareholders, he/she will be out of job forthwith.

I like to reiterate that they will not let cash piling up in corporations if they have the chance to develope, further develope and invest in new ventures basing upon the conditions of market, competition and profit and loss projection etc. Their core mission is to maximize profit for the corporations.

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