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Thread: U.S. companies hoard record amount of cash

  1. #101
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by ttwtt78640 View Post
    It is not so much that labor costs must be cut, but that they may not rise so much as to give the competition an artificial advantage. If company A becomes too generous then they start losing customers to company B which can then offer similar goods/services at lower prices. Do you shop for a fence/deck based on what the install crew gets paid or based on what that fence/deck costs you to have it built?
    On those details, I'm in over my head. I have not run a business in 30 years.

    Maximizing the profit is good, but does it control one's sense of right and wrong? And I'm not blaming anybody for anything, just asking the rhetorical question.

    In a moral society, would a sense of right and wrong prevail, or recede?

  2. #102
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    Re: U.S. companies hoard record amount of cash

    They are hoarding, imo, principally because normal macroeconomic fundamentals have been out the window ever since the Great Recession and the government/Fed went hyper aggressive at economic stimulation.

    When something as powerful as the Fed - which can, in essence, 'print' a virtually infinite amount of money, any time it wants to - decides to go all in in trying to control, it throws everything out of whack. Because now the economy is almost completely up to the Fed. If the Fed wants to boost the economy (or at least, the equity markets), it just starts another QE (which, btw, is still going on to the tune of several hundred billion per year...they just don't call it QE any more as they do not use 'new' money to buy the bonds - they use the money from maturing short term bonds they bought to buy more bonds).
    This is why everyone on Wall Street holds their breathe whenever the Fed meets or says anything as a group.
    And since the Fed has given NO clear direction about the economy, few know what they will do next. For years the Fed said 6-6.5% U-3 was one of the targets. Well that has come and gone and now they do not even talk about the U-3 any more (probably because they are realizing what a relative joke it is as an accurate measurement of employment).
    Before the Fed started butting in so strongly, corporations used their own people to decide which way the economy was going and thus decide when to spend and when to 'hoard'. Well, now it's up to the Fed and all the corporate CEO's can do is wait for the Fed to decide to finally say the economy is strong enough to raise rates or that the economy is in trouble and needs more help.

    One thing is certain, if the economy was growing healthily, the Fed would have long removed their ZIRP (zero interest rate policy). Obviously, it is not, so they have not. And as long as that is the case, many corporations would be foolish to risk spending their reserves on expansion.

    If any of you think the epicenter of the U.S. economy is Wall Street right now? Guess again. It is the Fed building in Washington. They are - for all intents and purposes - running the show.

    And remember, the Fed is the same organization that in 2007 (as the minutes from those meetings show), had virtually no clue how bad the housing crash was...even though it had already begun and should have been obvious to them.

    http://www.ft.com/cms/s/0/abc16b8a-6...#axzz3V36Ljctp
    Last edited by DA60; 03-21-15 at 03:14 PM.
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  3. #103
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by Henry David View Post
    On those details, I'm in over my head. I have not run a business in 30 years.

    Maximizing the profit is good, but does it control one's sense of right and wrong? And I'm not blaming anybody for anything, just asking the rhetorical question.

    In a moral society, would a sense of right and wrong prevail, or recede?
    When discussing wages one must first define what is a right or wrong wage. If two qualified candidates apply for a given position is it right or wrong to hire the one asking for a lower wage? Is it right or wrong to base wages on the number of dependents that a given worker has (the "living wage" concept)? Obviously some workers will do faster and/or higher quality work than others (in a given position) - is it right or wrong to pay those "higher performing" workers more even though they are supposed (alleged?) to be doing the same job?
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

  4. #104
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by Montecresto View Post
    Of course it is. Ensuring the liberty, tranquility defense and welfare of its citizens are the governments role and responsibility. And you are the threat and the danger.
    LOL!!

    And you see telling people what to do as the means to get those thing? You see removing freedoms as the preferred route to ensuring liberty?

    What are you? A closet communist? Do you condone a dictatorship and spin it to be "for my own good"?

    And you call ME a threat?

    I've know lefties don't care about personal freedom, choice and responsibility, but you take the cake, dude.
    TANSTAAFL

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  5. #105
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by ttwtt78640 View Post
    Promoting the general welfare is about promoting the opportunity for all - not income redistribution to promote equality of outcome for some.
    Yes...and the key word is "opportunity". There is no mention of "guarantee".
    TANSTAAFL

    “Certain types of loudmouthism should be a capital offense among decent people.” ― Robert A. Heinlein, The Moon is a Harsh Mistress

  6. #106
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by DA60 View Post
    They are hoarding, imo, principally because normal macroeconomic fundamentals have been out the window ever since the Great Recession and the government/Fed went hyper aggressive at economic stimulation.

    When something as powerful as the Fed - which can, in essence, 'print' a virtually infinite amount of money, any time it wants to - decides to go all in in trying to control, it throws everything out of whack. Because now the economy is almost completely up to the Fed. If the Fed wants to boost the economy (or at least, the equity markets), it just starts another QE (which, btw, is still going on to the tune of several hundred billion per year...they just don't call it QE any more as they do not use 'new' money to buy the bonds - they use the money from maturing short term bonds they bought to buy more bonds).
    This is why everyone on Wall Street holds their breathe whenever the Fed meets or says anything as a group.
    And since the Fed has given NO clear direction about the economy, few know what they will do next. For years the Fed said 6-6.5% U-3 was one of the targets. Well that has come and gone and now they do not even talk about the U-3 any more (probably because they are realizing what a relative joke it is as an accurate measurement of employment).
    Before the Fed started butting in so strongly, corporations used their own people to decide which way the economy was going and thus decide when to spend and when to 'hoard'. Well, now it's up to the Fed and all the corporate CEO's can do is wait for the Fed to decide to finally say the economy is strong enough to raise rates or that the economy is in trouble and needs more help.

    One thing is certain, if the economy was growing healthily, the Fed would have long removed their ZIRP (zero interest rate policy). Obviously, it is not, so they have not. And as long as that is the case, many corporations would be foolish to risk spending their reserves on expansion.

    If any of you think the epicenter of the U.S. economy is Wall Street right now? Guess again. It is the Fed building in Washington. They are - for all intents and purposes - running the show.

    And remember, the Fed is the same organization that in 2007 (as the minutes from those meetings show), had virtually no clue how bad the housing crash was...even though it had already begun and should have been obvious to them.

    http://www.ft.com/cms/s/0/abc16b8a-6...#axzz3V36Ljctp
    Well said.

    And the obvious solution would be for the Fed to keep its nose out...stop trying to "fix" things. The economy will fix itself, it'll do it quicker and the results will be more fair to all.
    TANSTAAFL

    “Certain types of loudmouthism should be a capital offense among decent people.” ― Robert A. Heinlein, The Moon is a Harsh Mistress

  7. #107
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by JANFU View Post
    Until they see long term growth trends they will sit. They would be stupid not to. Their job is to make money, not squander it.
    Quite true, I think.

    But what does that have to do with what I said?
    TANSTAAFL

    “Certain types of loudmouthism should be a capital offense among decent people.” ― Robert A. Heinlein, The Moon is a Harsh Mistress

  8. #108
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by Henry David View Post
    Their sense of conscience? A sense of what is right and what is wrong? Assuming that a compassionate conservative really does exist, and I happen to know a few do exist.

    Or is it right that the 99:1 ratio exists as it does in this country today? I say no.
    They already do that, it's called taxation. They do their part, moreso in fact. Same with the 1%. They already do more than me, and I do more than-93% of the workforce. I don't speak for sny corporation, but I know I'm done.

  9. #109
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by Mycroft View Post
    Yes...and the key word is "opportunity". There is no mention of "guarantee".
    That may be technically so yet we have established a Federal Poverty Level (FPL) and many income redistribution programs (aka the "safety net") with the express aim of getting/keeping folks above the FPL. This has the (unintended?) consequence of making one's "fair" earnings become based on household size/household income rather than the market value of the work alone. That means that even though the MW may be legally paid to both a live at home teenager and to a head of household (working side by side at the same McJob) only one will be further subsidized by the taxpayers.
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

  10. #110
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    Re: U.S. companies hoard record amount of cash

    Quote Originally Posted by Henry David View Post
    Their sense of conscience? A sense of what is right and what is wrong? Assuming that a compassionate conservative really does exist, and I happen to know a few do exist.

    Or is it right that the 99:1 ratio exists as it does in this country today? I say no.
    How, exactly, would you go about changing that ratio? My earnings (self employed handyman) are not affected by what a CEO makes, nor is what the CEO makes affected by my earnings. Do you propose that a national pay scale be established by the government - similar to what the GS pay schedule now does for federal workers?
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

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