Posted on 09/06/2010 3:01:59 PM PDT by justsaynomore
According to the Federal Reserve, businesses are hoarding about $1.8 trillion in cash. There are three reasons for that phenomenon. It’s their money. It’s their money. And it’s their money.
It’s their money to pay down debt. It’s their money to pay dividends to their stockholders. It’s their money to make an acquisition, or save some reserves in case the economy gets worse. In all likelihood the economy is going to get worse.
It’s also their money to burn at the company picnic if they choose.
But the White House and liberals want businesses to just spend it to create jobs to help mask the failed economic policies of this administration and Democrat-controlled Congress. A Washington Post article by Jia Lynn Yang on July 15, 2010 was titled “Companies pile up cash but remain hesitant to add jobs”.
Hesitant? How about no way in this environment of uncertainty!
The likelihood of tax increases, more federal spending of money we do not have, banks tightening their lending requirements, the continued housing and construction crises, the unfolding negative effects of the forced health care bill, the threat of more anti-business legislation, national security threats and a persistently stalled economy encourages uncertainty and discourages economic growth.
Unlike government, businesses spend money to make money instead of creating jobs they do not need or ones that are too risky. It’s called good business.
Last Friday, the Labor Department reported that the unemployment rate for August 2010 was 9.6 percent. This is an added indication that economic and spending policies are not working, and that businesses would rather sit on their cash than spend it recklessly.
Commenting on this latest bad economic news, the president said “We are confident we are headed in the right direction.” Maybe he has forgotten that unemployment went up after passage of the non-stimulus spending bill and has remained high ever since. Or maybe he hopes voters will forget.
To repeat myself and the sentiment of many others, the president, his administration and most members of Congress still don’t get it, and they are certainly not listening to any ideas other than their own. You stimulate the creation of jobs by reducing an employer’s cost to keep people employed (less taxes), and by reducing the cost of a business to grow their business (fewer regulations), and then leave taxes low and cease the regulatory onslaught on American businesses (more certainty). If these things happen, then the economy will grow and jobs will be created.
Job creation is not a complicated phenomenon, but the president and the Democrats have been convinced that less taxes is bad, and more regulations are good. It’s just the opposite and there is plenty of historical evidence to prove it.
During the president’s State of the Union address, he restated his commitment to job creation. When the Economic Report of the President was released last February, he restated his commitment to job creation. Last week when the president gave his speech on the U.S. withdrawal from Iraq, he restated again his commitment again to stimulating economic growth.
Mr. President, businesses are not going to start spending their hard-earned cash on business expansion based on speeches and promises. That’s not hoarding cash. It’s just good business.
Isn’t a lot of this money bailout money?
Businesses best beware. FDR imposed an excess profits tax under identical circumstances.
The health care Bill hasn’t gone into high gear yet and it is already hurting the economy.
They know that have to do ten time the 1099’s they used to do, They know it will raise costs, and it’s what they don’t know that has them scared. Add to that the fear of cap and trade shoved down their throats by a lame duck Congress and they are holding on to what they have.
A lot of this money is hoarded cash that would be used to buy more inventory that is instead being spent to carry higher than needed staffing levels. Go in to a lot of big box stores, you’ll get buried by offers to help by idle staff who are working part time...
A friend at Best Buy has one of the highest weekly schedule, with all of 1e hours on it, and half the time, he’s asked to go home an hour early.
Hoarding cash is prudent right now, especially since 0 and ilk have demonstrated that they are willing to demonize business to encourage class envy, curry favor with unearned entitlement parasites, and dangle tempting redistributions in return for votes.
I’m sure Herman Cain is a lot smarter than I am but I still cannot believe that Obama and crew are really STUPID ENOUGH to think that all their silly crap is what is needed to get the economy going. They know they are killing business but they have to put up a smoke screen, they can’t just come out and admit that they are DELIBERATELY destroying the American economy, can they?
Hey!!Zer0.
Let me give you a short lesson in business/economics.
Businesses do NOT exist to provide people with jobs.
Businesses exist to make a profit for their owners.
Herman has said the same thing on his show - that at this point it’s hard to believe it’s not deliberate.
Now that's what I'm talking about!
- Listen to Herman Live, online, weeknights 7-10
SPEECHES:
- Speech at CPAC, Speech at SRLC, Atlanta Tea Party Speech, Past Speeches, Herman's "Thomas Jefferson comes to dinner" show. Part 1 and Part 2
WEBSITES:
- Hermanator PAC, Herman's Intelligent Thinker's Movement, Draft Herman Cain for President
FACEBOOK:
- Herman Cain
The cash is not being hoarded, it is merely set aside as a contingency reserve
roger that. It's standard procedure for this administration to rationalize their failures by demonizing others.
Its called “Going Galt”,
and I imagine small business and big business are thinking the same.....there’s a health care bill coming, and it won’t be cheap.
I thought you might like this one.
The reason I think that is I’ve noticed a lot of liberals calling into Herman’s show with the meme, “Businesses are just being selfish sitting on all that money - it’s THEIR fault that the economy isn’t getting better.”
Of course they’d love everyone to hate the business people. How better to hasten to their goals of socialization (business=bad, government=good).
I know this is anecdotal but indulge me because I think this narrative illustrates perfectly what small businesses in this country now face.
Husband used to work at a small but happening plumbing supply company here in the swamps of Delaware. They had 60 employees and for the most part they’ve survived the recession okay, using recidivism to downsize a bit. But the business is there, steady, not robust but there’s no fear they’ll go out of business.
The company provides plumbing parts for contractors and such. Such as pipes goes bad from time to time so there’s a continuing repair type of thing going on.
the company provides health insurance for the employees and like small businesses everywhere, they wrestle with such as employee share, getting the cheapest price but with good coverage.
At one time, befor Obama, the company had a protype of a fancy bathroom with plans to add a division that would sell fancy tiles and fixtures for bathrooms, a market they’d determined might work in this resort area of Delaware. The notion had been in the company newsletter, the kind of story small businesses like to announce, a way to keep employees upbeat and happy with visions of bright futures and pay raises in front.
The company also provides a 401K with company match, a short term disability plan, good vacation leave...just a small business doing what small businesses do.
They’ve got money. But they’re going nowhere on anything but keeping the status quo.
Husband’s now retired from this company but in his contact with former employees, scuttlebutt is that management ain’t getting off the dime until this Obama and his Dem minions are gone. They don’t feel that this is an administration that is kind to businesses, they sure are worried bejeesus about this health care mess, they just want to limp along and see what happens in 2012.
This, I argue, is where so many small businesses are today. They know Obama and the Dems hate them and want to tax them all to high hell and back as many of them fall into the “rich” by the time the company profits are calculated.
The health care thing has them really sitting and sucking thumbs as they don’t know if the gubmint’s going to take over health care or what or whether they should be looking into other plans or even what kind of plans they need and what the hell the laws will be.
So all the incentives to get small business to move off the dime are for nought. This inertia is felt even in the housing industry. You and I know that if we’ve plans to buy a house soon...well might as well wait until 2012 because who knows if we’ll have a job or what more damages these Dems will do.
In short and summary, forgive me for my length....it’s the administration that CANNOT....no they CANNOT ..make that horse drink even though they pointedly and with insistance...lead it to water.
They can’t change that and there’s the rub.
It’s highly unlikely any of the Baraqqis ever read any Ayn Rand. They don’t have a clue........
If you want to put it that way, then the liberal media is "hoarding" the truth. When are they going to let it out?
Seriously, the choice of "hoarding" is a transparently obvious (if only hussein's administration was so transparent!) attempt to cast businesses in a negative light. Part of that liberal/leftist socialist media bias against businesses. They are "hoarding" with all it's negative connotations. They would never say that due to the unstable nature of the economy prudence, good business sense/strategy dictates holding larger than normal cash reserves and limiting risk.
This is because businesses are experiencing significant additional risk in other areas. Of course, the (dying) MSM will never admit that most if not all of the additional risk and exposures placed on businesses is due to the erratic but generally anti-business policies of their golden boy, hussein obama and the Reid/Pelosi led Congress. In reality, nearly all the economic turmoil which is slowing/contracting the economy, worsening the job market, etc. is directly due to the failed economic policies of the socialist government. The really sad thing is, any decent economist could have told you this would happen. Socialism has failed 100% of the time it is tried. We didn't have to put millions out of work, close thousands of businesses, evaporate billions in retirement accounts, nor go trillions into debt to (re)learn this lesson. Anyone and everyone knew this administration's policies would fail and further trash the economy. Their actions are deliberate, and contemptible.
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