Big Business Is Not to Blame

"In normal times, cash is meant to be spent."

Uh, no: according to this article, in normal times, cash is meant to saved. That's why the big companies that saved their money are holding their own, and the big companies that didn't (like auto manufactures for instance) are drowning.

The bigger question is - what did they know that the rest of us didn't, or at least, what the rest of us forgot?

"So while conventional wisdom holds that cash is now king, it lacks the magisterial authority to make problems disappear."

No, cash won't make the problems of our economy disappear - things are too screwed up for anything to make them disappear just now. But the lesson seems to be - with enough cash on hand, you stand the best chance of weathering the storm.

A lesson for us all.

A is A corporate moguls welcome to the jungle.
Let???s see if you can survive the BBC ???Beans and Bullet century???
Minutemen
???Avarus animus nullo satiatur lucro ; Beneficium accipere libertatem est vendere
Panem et circenses ;Cuiusvis hominis est errare; nullius nisi insipientis in errore perseverare
Ego spem pretio non emo Not Again Ex silentio ,Tu ne cede malis sed contra audentior ito
Sic semper tyrannis seeks mperium in imperio ???
Minutemen
In pace, ut sapiens, aptarit idonea bello -Inter arma silent leges - Sic semper tyrannis Ipsa scientia potestas est ??? against the darkness be ready

A is A corporate moguls welcome to the jungle.
Let???s see if you can survive the BBC ???Beans and Bullet century???
Minutemen
???Avarus animus nullo satiatur lucro ; Beneficium accipere libertatem est vendere
Panem et circenses ;Cuiusvis hominis est errare; nullius nisi insipientis in errore perseverare
Ego spem pretio non emo Not Again Ex silentio ,Tu ne cede malis sed contra audentior ito
Sic semper tyrannis seeks mperium in imperio ???
Minutemen
In pace, ut sapiens, aptarit idonea bello -Inter arma silent leges - Sic semper tyrannis Ipsa scientia potestas est ??? against the darkness be ready

They have all this cash because they have been paying less than cost of living raises for the last 10-15 years. Consumers that behaved responsibly are in the same boat, so I don't feel sorry for the corporations. And one last point, so these companies are having trouble borrowing money. That makes no sense they are so large they could buy or create a bank under their name and get cheap money from the Treasury to loan to themselves, removing the incompetent banks from the equation. Consumers can't do that.

Uh, let's see, where'd they get all that money they've stashed away? Hey! Maybe consumers put their houses and themselves in hock so they could give the money to Corporations? Yuh think?

"If you exclude banks and auto companies, we haven't seen many Fortune 500 companies in distress yet,"
Since 17% of the S&P 500 bonds are rated as "Junk", or 1 in 6 companies what is the threshold "that many"?
The reason I ask is because the going rate for corporate junk bonds is now in excess of 20% with their credit default swap rates in the stratosphere making their ability to service or roll over their debt a big question going forward..

Workers need to get their fair share of productivity increases, whether in more pay or in more leisure time. That used to be the unspoken contract, but that has failed to happen in recent years. Employers have stopped sharing gains from improved productivity. Some of the gap between where the compensation was and where it should be was filled with borrowing, either against the house or on credit cards. But businesses NEEDED that spending, as we're finding out now; consumer spending has frozen up and even the cash-rich companies (some of them arguably greedy on prices or miserly on wages) won't totally escape. We're seeing an unwinding of the processes that led to a mass market and much high growth some 90 years or so ago, and are going back to high concentration of wealth. Businesses will be reluctant to invest because people won't spend, and people won't spend because they don't have money.

Only the government is really trying to stimulate things now. I think health care and energy are the key. In both areas we overspend and/or misspend massively already, and if both get major reforms that would need overcoming special interests, enough money could be freed to ignite a sustainable boom. Otherwise it'll take a transformational technology and the U.S. leading it, and those don't tend to be created on demand.

What a great article! I continue to learn more and more about the myriad aspects of this whole fiasco. Some lessons that seem apparent include 1. People need to save more 2. People need to control their spending urges, budget, and ideally spend below their means 3. Not everyone should own a home 4. People do not need 4000 square feet to be happy in a home 5. Regulation of banks and exotic financials is crucial! They need to maintain reserved, not 32:1 6. Regulation of lenders and brokers is desparately needed! Note that many of these scoundrels have simply shifted over to exploiting FHA. 7. Accountability is needed to be instated at all levels! Credit card companies that flood the market with offers and half-truths, and then lobby for protection against bankrupt consumers need to be reined in, as well as financial managers, profligate consumers, etc. 8. Most of us share some blame 9. Blame is not very valuable, but we all need to learn and change our behaviors to get this country moving back in the right direction 10. In spite of our prediliction for quick and easy fixes, this took a long time to grow, and will take a long time to conquer. It will take even longer, and take more discipline, to prevent a recurrence!

Here's the problem in a nut shell...from "Americans the Stupid"...the Stupid have been given a pacifer of beer, entertainment, a credit card and a promise of a trip to heaven while our leaders follow the philosophy of Omar the Tent Maker " take the cash and let the credit go"...

Here's the problem in a nut shell...from "Americans the Stupid"...the Stupid have been given a pacifer of beer, entertainment, a credit card and a promise of a trip to heaven while our leaders in government, business, religion and the media have followed the philosophy of Omar the Tent Maker, "take the cash and let the credit go"...

Repeatedly, in the past few months, academic economists, most notably Paul Krugman, has been arguing how the liquidity trap makes monetary policy totally ineffective, whereas a hefty boost in discretionary spending on public works such as Obama is envisaging, will immediately cause GDP and employment to increase.

That's perfectly true at the macroeconomic, ???comparative static' level. But real-world 21st century economies are far, far more complex than what those old 'Keynesian models' that are now making a noisy comeback depict. Because we now can model the greater complexity that we had always known characterises real world economies, we can now clearly see the contours of the short-term dangers that we had always known were lurking in the hidden recesses of the globalisation process. And precisely because we can see these contours and, looking ahead, we also discern the brightness on the horizon, we are groping to draw a roadmap that better reflects the features of the landscape, with its pitfalls. We are doing this at the same time as we stumble along without relenting towards the unmistakable brightness on the horizon.

What are the new complexities that the older economic models failed to consider? They are : (1) market power, an old idea whose rigorous conceptualisation and articulation in economic discourse makes the simplicity of atomistic/perfect competition laughable; (2) the formalization of imperfect knowledge/asymmetric information/disequilibrium micro-economic foundations of macroeconomics, which makes econophysics slightly more relevant at the same time that concepts of complexity-theory become incorporated in quantitative economic models in parallel with psychological concepts; (3) the structural reforms process of globalisation, reverberating all the way down through regional reconfigurations of production structures, reforms of national industrial strategies, and reprioritization of individual firms??? production niches and specialisation in newly-emerging areas of comparative advantage); and (4) the emergence of a mulitipolar world where the old idea of payments settlement through a convertible currency ??? the currency of the hegemon ??? is fast crumbling without any alternative offering even a remote illusion of emerging in the near future.

Concretely, this rather sweeping and vague narrative translates the real economic upheavals that individual firms and corporations, with cash piles or without, will inevitably have to go through during the next three years to transform early-twentieth century production structures into twenty-first century green- technology, renewable-energy, smart-materials, IT-driven production processes that supply the altered-consumption-goods-mix and altered-capital-goods-mix that a brave new 21st century global market demands.

Huge challenges, but exquisitely handsome rewards at the end.

And IF Obama doesn't tax it all away from them just because they have it when other people don't.

companies that were responsible may weather the storm ifffffff the fed allows their money that they saved to become worth something by raising interest rates