Companies' cash stash grows

[JohnWxy]

http://www.usatoday.com/printedition/money/20110104/cash04_st.art.htm?loc=interstitialskip

Companies are doing everything they can do to get rid of cash — short of hiring people — but the moola just keeps mounting.

The typical ways companies burn off excess cash, such as boosting dividends, buying back their own stock and buying other companies, are rising. But none of these standard uses of cash are keeping up with swelling corporate earnings, resulting in an ever-increasing pile of cash.

The largest U.S. companies in the Standard & Poor's 500 index are sitting on a record $902.4 billion in cash, up 10% from a year earlier, S&P says. That's expected to rise to another record when the sum is tallied for the end of 2010.
(more)

[LawnKorn]

1. The end product of Reaganomics

The trickle down has ceased. The money has collected in the coffers of the rich and is no longer circulating in the economy.

The solution is to selectively use the tax code to get this money out of the corporations and the portfolios of the rich and put it back into the economy.

[angryfirelord]

2. It's a catch-22

From what I can see, if you're a corporation, you are going to want to invest because sitting in idle cash doesn't do much investment-wise. However, you're not going to risk losing it if there's not enough demand for your product. The thing I fear is that now that the austerity programs are being implemented prematurely, there's going to be more fear of a drop in economic output, which is going to create less of an incentive to hire new people. So the cash is going to just pile up until the cycle is broken somehow.