[Azure]

Article talking about the trillions in cash, and why companies aren't investing it.

Feb. 11 (Bloomberg) -- A majority of companies in the Standard & Poor’s 500 stock index increased cash to a combined $1.18 trillion while simultaneously reducing spending, keeping a jobs recovery on hold.

Companies may be wary of investing and hiring because of questions about government stimulus, taxes and other federal policies that impact business, Lazear said. Subsidies designed to create jobs “just don’t work” and only drive up deficits that may require higher taxes to control, he said.

“What you need to do is make sure the climate for business continues to be positive, and talking about tax increases is not the right way to do that,” Lazear said.

http://www.bloomberg.com/apps/news?p...d=a6kXsL1Q5FYc

Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?

The answer to that question has become a political flash point between the White House and big business groups such as the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.

When asked why companies are holding back so much, many economists cite broader uncertainty that goes well beyond anything happening in Washington. Firms aren't sure whether the economy can sustain a strong recovery. And as long as consumer spending remains low, there's not much incentive for companies to ramp up.

One explanation, said finance professor René Stulz at Ohio State University, is that as competition has become more global, it's become harder for individual companies to survive, and so they hold on to more cash to be safe. He added that companies have also increased their cash holdings in the wake of the financial crisis, particularly since the bankruptcy of Lehman Brothers in September 2008, as the banking system has become more fragile and credit has become scarce.

http://www.washingtonpost.com/wp-dyn...T2010082003981

Interesting how the banking system in the US is still causing problems. I guess the sweeping regulations made by the Obama administration didn't give a lot of companies hope that it'll change anything for the better.


http://www.washingtonpost.com/wp-dyn...T2010082003981