Why Companies Cling To Cash?

Written By Gary Spirer Published December 10th, 2010

Uncertainty, fear, lack of opportunity are just some of the reasons today’s WSJ headline points out that corporations are clinging to cash.

Washingtong’s anti-busines sentiment continues as Obama begrudgingly with the Democrats say they have been held hostage and forced to concede to tax cuts.

Obama continues to try to mimic FDR, but he’s no FDR.

Bernanke continues to operate the FED as if he were amid the Great Depression. Congress – Republicans and Democrats – continue to pay lip service to a huge and growing deficit.

All businesses know that growing debt without growth means mismangement and the inability to create profits and free cash flow.

In the anti-business, spend world of Washington and Congress, plus the artificially low Mr. Stimulus, Print Money Bernanke, you have a continuing recipe for disaster – artificial growth with higher taxes and large cut backs on entitlements and other goodies in the future.

The game is kick the can down the road. Bet on growth to bail us out as the dollar depreciates along with purchasing power.

Wall Street rejoices since bonds look scary and hot money jumps into stocks.

Speculation increases as low interest rates penalize savings and prudent investments. Unemployment comes down slowly but mainly from manipulated growth.

The US economy is fundamentally weakened because private equity and banks still leave small businesses out in the cold. Unfortunately, small businesses have little or no cash to cling to.

With little or no cash, small businesses can’t grow and hire – they cause 2/3 of new hires.

Something is wrong with the picture, especially when any small business that makes $200,000 + is targeted in the future to be taxed for its growth and success.

Now, would you be eager to invest long term in this type of climate where the inmates are running the economic asylum?


Roger Due

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