21 July 2012

Why Is US Business Sitting on $Trillions of Cash?

US non-financial businesses may be sitting on as much as $5 trillion in cash -- in the middle of a global recession. Apple has over $100 billion stashed, while Microsoft, Google, and Cisco have stashed roughly $50 billion apiece.

Peter Thiel wonders why these cash-rich companies are not using their hoards of simoleon to solve the human world's big problems. Thiel, himself, is invested in a number of disruptive technologies from life extension to private space launch to "cities on the ocean" and more.

There must be a good reason why so much cash is being held in reserve -- at a time when plenty of bargains can be found, and when there are so many opportunities to advance modern science, technology, and human enterprise.

Here at Al Fin, we suspect that companies are waiting for the results of the November US national elections. Investment has been stifled by a very uncertain political environment throughout the duration of the Obama regime. Nothing constrains risk-taking in the private sector so much as a vocally anti-private sector US president and executive branch.

This is true for the global economy, just as it is true for the US economy. If the US is led by a stasist uber-statist regime, prospects for growth are somewhat dismal not only in the US, but in global markets at large.

The Obama regime is unhappy about the hoarding of cash by US non-financial enterprises -- just as it is unhappy about possibly greater cash hoarding by US financial enterprises such as banks. Hillary Clinton and other administration spokespersons have already complained about these huge stashes, but relatively mutely. After the election, if Obama is still US President, expect much more pressure to be put to bear.

Of course, if Obama is not US President in late January 2013, it is likely that no pressure will be required to begin to free up large amounts of cash for investment, R&D, ventures, and so on.

More: Is Obama letting his cat out of the bag too soon? Most American voters understand Obama's strong pro-government leanings. But they are slowly learning about his anti-private sector biases more quickly than might be best for Obama's re-election campaign.

Yet More: Meditations from the Book of Barack

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Blogger Jehu said...

Hardcore regime uncertainty certainly. Also, the expected cost to employ additional employees has some seriously massive error bars right now too, especially in the benefits package whose cost has become exceptionally unpredictable.

Saturday, 21 July, 2012  
Anonymous Anonymous said...

Need. Customers. To. Buy. Products. Customers. Need. Jobs. To. Buy. Products. At the bottom of the worst recession in decades do you really think we businessmen sit on our hands for four years because of some made up bullshit about anti-business attitudes? Should we sit on our hands four more years because Obamney will easily win reelection? Really you've lost all credibility here.

Saturday, 21 July, 2012  
Blogger al fin said...

You forgot something:

Need... rational... economic... agenda... to... create... jobs.

All you have to do is to listen to Obama, observe his actions, and read his own words going back over a decade. There is nothing "made up" about Obama's anti private sector bias.

But you are right that Obama's attitudes and underlying thinking can best be described as "bullshit."

Before attempting to groundlessly attack someone else's credibility, you may wish to first build a bit for yourself.


Saturday, 21 July, 2012  
Blogger Eric said...

I have limited experience dealing with Microsoft and Google. I know Microsoft in particular is still very slow in responding to change, Google has gotten worse as they have taken up more and more people. Larger corporations like this are more risk averse compared to smaller firms anyway.

But it is bad of they aren't doing anything with that money, most of the real growth in the past few decades has come from technology firms. I think we can weather another 4-6 years of pain before a serious economic depression comes.

Sunday, 22 July, 2012  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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