The biggest lie about U.S. companies

Market Watch ^ | Aug. 3, 2010 | Brett Arends

[KeyLargo]

Aug. 3, 2010, 12:01 a.m. EDT

The biggest lie about U.S. companies Commentary: Healthy balance sheets? They owe $7.2 trillion, the most ever

By Brett Arends

BOSTON -- You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they've paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.

You could hear this great news pretty much anywhere -- maybe from Bloomberg, which this spring hailed the "surprising strength" of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies "have accumulated an astonishing $1.8 trillion of cash," leaving them in the best shape, by some measures, "in almost half a century."

Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were "hoarding cash" but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?

It all sounds wonderful for investors and the U.S. economy. There's just one problem: It's a crock. Investors hear July echoes

[KeyLargo]

"Meanwhile, people on the left have an interest in making businesses sound really healthy too: If greedy companies are hoarding cash instead of hiring people, they can cry "Shame on them! Vote Democratic!""

[reefdiver]

Last I checked this was still a free country. Companies owe donks or anyone else nothing but their paycheck and or what ever was offered and accepted at the time of their employment. People are still free to leave and or look elsewhere for a better offer. They can also start out on their own, becoming a greedy company. Why don’t donks do more of that?

[farlander]

Because it’s hard and it takes a lot of work. Much easier to be a ‘victim’, whine, and take handouts.

[Aevery_Freeman]

Companies owe donks or anyone else nothing...

Are you kidding? The government is the biggest protection racket known. Why do you think there are so many lobbyists? To pay off enough congress-scum to remain in business.

Ask Bill Gates what happens when you fail to provide an adequate level of graft - the results are expensive.

[KeyLargo]

I agree.

"Last I checked this was still a free country. Companies owe donks or anyone else nothing but their paycheck and or what ever was offered and accepted at the time of their employment."

However, Obama and the Dims do not not.

[LRoggy]

I'm sorry but this analysis is pretty shallow. Comparing cash to total debt is as bad as editing a film clip.

There are other types of assets and liabilities on the balance sheet and many of those assets can be converted to cash.

And does this include the banks which ALWAYS have more debt than cash on their balance sheets, since that is how a functioning bank works.

The fact is that most of the S&P 500 are in the best shape financially then they have been in a LONG TIME. It is not just because they are being conservative but because so many of them have learned to break even during tough times AND can generate positive cash flow in these times.

Except those that are being run by Obama of course . . .

The left is moronic for even bringing up the issue, and clowns like Zakaria just show why they keep losing viewers when they open their mouths or sharpen their pencils.

[MattAMiller]

Companies take on debt because they think they can do something with it. Giving out dividends is usually a sign a company has gotten old and isn’t growing much. And any well run company will hold onto precious little cash since it doesn’t do much good sitting around in a bank account.