i thought the bail outs would stimulate our economy??
Pepe Silvia
Posts: 3,758
wasn't that how they rationalized it? they would help get money into circulation? but according to this article the Wall Street Journal is reporting some of these companies are actually hoarding their money
http://www.huffingtonpost.com/2009/11/0 ... 41949.html
Citigroup, Bank Of America Among Companies Hoarding Cash
Call it the Great Cash Hoard.
The Wall Street Journal reports this morning that, in response to the financial crisis, U.S. companies are hoarding more cash than they have in the last 40 years.
Among these corporate cash-savers are banks like Citigroup and JPMorgan Chase, two institutions are holding onto funds "as if another financial crisis were on the way," reports Bloomberg. Citigroup has almost doubled its cash reserves since Lehman's fall last year, a move which seems to be very popular move among Wall Street's mega-banks:
"The four largest U.S. banks by assets -- Bank of America Corp., JPMorgan, Citigroup and Wells Fargo & Co. -- have increased their combined liquidity by 67 percent to $1.53 trillion as of Sept. 30 from $914.2 billion in June 2008, before Lehman's collapse, according to the companies' third-quarter reports. The amount equals 21 percent of the banks' total assets, up from 15 percent."
In fact, as Bloomberg points out, Citigroup's massive cash holdings are more than five times great than those held by Warren Buffett's Berkshire Hathaway. Here's one particularly striking quote from Bloomberg:
"In my 44 years in the business, I have never seen a company with remotely as much cash as this," said Richard X. Bove, an analyst at Rochdale Securities in Lutz, Florida.
For its part, JPMorgan is maintaining what has been called "a fortress balance sheet," with $456 billion in liquidity. JPMorgan's cash holdings have shot up to 22 percent of its total assets, up from 9.5 percent before the financial crisis took hold.
The WSJ points out that the trend isn't just happening on Wall Street:
"In the second quarter, the 500 largest nonfinancial U.S. firms, by total assets, held about $994 billion in cash and short-term investments, or 9.8% of their assets, according a Wall Street Journal analysis of corporate filings. That is up from $846 billion, or 7.9% of assets, a year earlier.
The trend appears to have continued in the third quarter, despite an improving economy. Of those 500 companies, 248 have reported third-quarter results. Their cash increased to 11.1% of assets, from 10.1% in the second quarter. Companies as diverse as Alcoa Inc., Google Inc., PepsiCo Inc. and Texas Instruments Inc. all reported big third-quarter increases in cash holdings."
Interestingly, one of the most well-funded companies mentioned in the WSJ's piece is Google, which has short-term investments and cash equal to 58 percent of its total assets. That's a whopping $22 billion in cash, if you're scoring at home.
Perhaps Google should start a lending business...
Read more at: http://www.huffingtonpost.com/2009/11/0 ... 41949.html
http://www.huffingtonpost.com/2009/11/0 ... 41949.html
Citigroup, Bank Of America Among Companies Hoarding Cash
Call it the Great Cash Hoard.
The Wall Street Journal reports this morning that, in response to the financial crisis, U.S. companies are hoarding more cash than they have in the last 40 years.
Among these corporate cash-savers are banks like Citigroup and JPMorgan Chase, two institutions are holding onto funds "as if another financial crisis were on the way," reports Bloomberg. Citigroup has almost doubled its cash reserves since Lehman's fall last year, a move which seems to be very popular move among Wall Street's mega-banks:
"The four largest U.S. banks by assets -- Bank of America Corp., JPMorgan, Citigroup and Wells Fargo & Co. -- have increased their combined liquidity by 67 percent to $1.53 trillion as of Sept. 30 from $914.2 billion in June 2008, before Lehman's collapse, according to the companies' third-quarter reports. The amount equals 21 percent of the banks' total assets, up from 15 percent."
In fact, as Bloomberg points out, Citigroup's massive cash holdings are more than five times great than those held by Warren Buffett's Berkshire Hathaway. Here's one particularly striking quote from Bloomberg:
"In my 44 years in the business, I have never seen a company with remotely as much cash as this," said Richard X. Bove, an analyst at Rochdale Securities in Lutz, Florida.
For its part, JPMorgan is maintaining what has been called "a fortress balance sheet," with $456 billion in liquidity. JPMorgan's cash holdings have shot up to 22 percent of its total assets, up from 9.5 percent before the financial crisis took hold.
The WSJ points out that the trend isn't just happening on Wall Street:
"In the second quarter, the 500 largest nonfinancial U.S. firms, by total assets, held about $994 billion in cash and short-term investments, or 9.8% of their assets, according a Wall Street Journal analysis of corporate filings. That is up from $846 billion, or 7.9% of assets, a year earlier.
The trend appears to have continued in the third quarter, despite an improving economy. Of those 500 companies, 248 have reported third-quarter results. Their cash increased to 11.1% of assets, from 10.1% in the second quarter. Companies as diverse as Alcoa Inc., Google Inc., PepsiCo Inc. and Texas Instruments Inc. all reported big third-quarter increases in cash holdings."
Interestingly, one of the most well-funded companies mentioned in the WSJ's piece is Google, which has short-term investments and cash equal to 58 percent of its total assets. That's a whopping $22 billion in cash, if you're scoring at home.
Perhaps Google should start a lending business...
Read more at: http://www.huffingtonpost.com/2009/11/0 ... 41949.html
don't compete; coexist
what are you but my reflection? who am i to judge or strike you down?
"I will promise you this, that if we have not gotten our troops out by the time I am president, it is the first thing I will do. I will get our troops home. We will bring an end to this war. You can take that to the bank." - Barack Obama
when you told me 'if you can't beat 'em, join 'em'
i was thinkin 'death before dishonor'
what are you but my reflection? who am i to judge or strike you down?
"I will promise you this, that if we have not gotten our troops out by the time I am president, it is the first thing I will do. I will get our troops home. We will bring an end to this war. You can take that to the bank." - Barack Obama
when you told me 'if you can't beat 'em, join 'em'
i was thinkin 'death before dishonor'
Post edited by Unknown User on
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So... I'm not paying my credit card bills. Fuck em. I can't afford to pay for everything right now with my wife out of work and me making 70% of what I was making last year.
edit: I'm assuming those banks received bailout $$$ ????
i think we can officially now not call it a bailout ... rather a cash grab and one last gift from Mr. W himself ... he made a lot of people richER in his terms all on the backs of taxpayers ...
I agree most of us have too much debt. So, why give $$$ to the banks so they can give more loans and create more debt? (which didn't happen [see OP] but that was what we were told) Why is it better to give banks money rather than give people who have debt the $$$ to pay it off?
Also, What does "we should (not) be taking loans we don't have" mean?
well, i agree with that. i always thought the bail out program was pretty dumb for that reason... our economy collapses due to bad debt so our response is to make sure it's easier for people to take on debt?
i think i made a typo... should read "than we should be taking loans we know we can't pay." it just means that if i offer to loan you a million dollars and you know you'll never be able to pay it off, you probably shouldn't take the loan. i think banks should be held to the same standard, or even a higher one. it's just common sense. don't write a check you can't cash... it should apply to banks too. they made plenty of loans they knew would default and knew they probably couldn't afford to make. for every person that took out a loan they couldn't afford to pay back there was a bank that made the loan that should have known better. yeah, it's crap that they got bailed out and the consumers didn't, but higher cash reserves is a good thing in the long run that i won't complain too much about.
I agree with this, but the thing is, shouldn't they have been doing this from the beginning? They fucked up by not doing it, taking a gamble by keeping a small amount of reserves. The way things are set up is if you do that and you are wrong, you fail and a business that was more savvy with their programs will be just fine. It's just unfortunate in my view that they did this because they knew they wouldn't be allowed to fail and since that is the case there really isn't anything stopping them from repeating it in the future when they feel things are safe again.
I guess my main point is, sure they are holding onto more reserves now, but for how long?
exactly, why give it to the people who fucked up in the first place when the populace could've used it?
i probably could've titled the thread better
what are you but my reflection? who am i to judge or strike you down?
"I will promise you this, that if we have not gotten our troops out by the time I am president, it is the first thing I will do. I will get our troops home. We will bring an end to this war. You can take that to the bank." - Barack Obama
when you told me 'if you can't beat 'em, join 'em'
i was thinkin 'death before dishonor'
Godfather.
i don't think this is true. the problem with this crisis is not that they knew they'd be bailed out... i don't think anyone saw that coming. i think the problem was greed and pride... i think it never in a million years occurred to them that what they were doing wouldn't work. they had phds and mba's to convince themselves they'd all get rich pulling these stunts and they were all way too smart for it to go wrong.
yes, they should have had higher reserves all along. but they have great lobbyists that got all the rules relaxed for them and we have all paid the price. i think there is a definite danger they'll go right back to doing what they were doing, which is why it is so important now to pass financial reform legislation to regulate these kinds of things. better late than never is all i'm saying. it was a rude awakening for wall street and it's time to start holding them to the same standards they hold us to.
He mentioned other things not to pay or buy right now, I just don't remember it all. Basically, it was anything that you don't need to survive. He said pay for the basics, like food rent/mortgage, electric, gas, etc. only!
I couldn't agree more. Most credit card places will make deals with you after you don't pay for a while. If you can put them off for 7 years, you don't have to pay them at all. You will still owe them, but they can't come after you for it, nor put it on your credit report. That is 7 years from the last payment, so that whole story about giving them $5 a month, just to keep them off your back, can hurt you. Oh, and once the bill has been given to a collections agency, write them and tell them to prove you owe the amount they say. Odds are pretty good that they can't. My lawyer told me that one and it worked.