Take Some Risk Already, Will Ya?

Seriously, how much cash are corporations going to hold on to?

We have a hundred thousand something troops headed home from Iraq over the next few years, maybe the corporations will awaken from their slumber and hire some of these people – many of whom will be highly skilled, disciplined and coming home to kick some ass and make their mark the way the homecoming vets of World War II did.  I’d hire a dozen of them if I could.  America’s corporations are in a position to hire all of them.

Not only are corporations holding a ton of cash, but they’re taking more and more in with every passing day so long as they choose not to do much in the way of expansion.  Here’s Phil Izzo writing for Real Time Economics with the Number of the Week:

$261.98 billion: How much more companies took in than they spent in the third quarter.

Companies continue to sit on lots of cash, frustrating those hoping to see it deployed to spark jobs growth. But on the upside this buffer makes U.S. firms less vulnerable to contagion if the European debt crisis escalates.

Nonfinancial companies held more than $2.1 trillion in cash and other liquid assets at the end of September, according to the Federal Reserve‘s latest flow of funds report. That represents some 7.2% of all company assets, down slightly from the second quarter but still near highs last seen in the early 1960s.

I mean, seriously – Grow a pair!  Profit margins are at almost disturbingly high levels but without some revenue growth and investment, it’s meaningless.  Multiples won’t expand so long as growth looks like a fourth priority (behind profitability, liquidity and compensation).

Time to do something.  Take some risk already, will ya?  Jump!


Number of the Week: The Upside of Companies Sitting on Cash (WSJ)




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