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THE IDLE $528 BILLION
The Seattle Sunday Times, 9/1 2004 reports that corporate capital is hoarding cash "like
squirrels stashing nuts for the winter.
"The recent decision by Microsoft to launch a
$75 billion stock buyback and dividend program is a sign of a new reality:
corporate America is flush with cash."
"Nationally, 500 of the largest corporations
are sitting on a record $582 billion in cash and liquid short term investments,
said Standard & Poor’s in New York. That's up from $500 billion at the end
of 2003 and $261 billion in 1999. Corporate profits, now at record levels,
partly explain why so much cash is piling up."
Something seems very much out of kilter if there
is such an enormous pile of cash sitting in the country unused while the country
is facing increasing financial crisis.
If you're wondering where all this loose change
came from you might check the tax returns to corporations Bush pushed through
Congress. At least 80 percent of it
went to those corporations already loaded with surplus cash.
Bush said they needed it to spur investment.
But something happened on the way to the billionaire bank - it was full
and didn't need any of Bush's so-called investment stimulus.
So we find another Bush lie to add to an endless string from war to
economic recovery, to environment, to education, to health and welfare, and on
and on.
Why is so much cash going nowhere? One might say
that capitalism is stagnating. As Jonathan Golub, U.S. equity strategist for J.
P. Morgan Fleming Asset Management in New York says, "They've become
sheepish about taking any aggressive behavior, whether its making an
acquisition, reinvesting the capital or something else.”
If capitalism is getting “sheepish”
about investment it and other indications such as stalled or declining retail sales,
sluggish stock market, lowering wages, increased unemployment, loss of pensions
and health care, rising oil prices and an uncertain, lie-based, never-ending war
shows that it is, we better ask why some of that $528 billion can't be used to
do some good?
Is there a
danger of economic collapse? According
to a Stephen Dunphy report in the Seattle Times of 5/20/04, "James Paulson
chief investment strategist for Wells Capital Management,
"Revived
inflation, not slow job creation or personal income, will be the biggest concern
for the U.S. economy.
"Inflation's return will also expose the
downside of debt for many people and businesses.
In five years or so, Paulson said, there could be a consumer-lending
recession in this country, and
it could be real nasty.
Why not use
some of that huge nest egg to strengthen the economy, instead of letting it
gather still more surplus cash in interest? Some of it could be used, for
instance, to raise wages. That would help considerably.
Or, a lot of it could be invested in public works that provide jobs at
good wages. Or if Social Security is
at risk, throw a few billion that way and help keep old people from poverty's
door. Also, financing a national
health care system would be of real benefit.
In other words, use that giant hoard of idle capital for constructive
social purposes. It would inject
some lifeblood into the old system, relieve poverty and revive hope.
It could even lead to promoting primary concern for people, who, after
all, do the work. But don't count on
it.
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