Are Businesses Quietly Preparing for a Financial Apocalypse?

Just want to put this to ATS members. I assume there are a number of business owners who participate in these forums. I find this article interesting because it shows there is apparently a lot of businesses sitting on cash not merely as a precaution but outright anticipation of something ominous either emerging in the economy or yet to hit. I kindly ask you therefore, does this article resonate with how you feel about your business and broader economic conditions? I guess further investment could be the same for those businesses who rely on debt and similarly refrain from growing debt to invest given the uncertainty.

Casey Research

US corporations are sitting on more cash than at any point since World War 2.

That's without including banks. I'm only talking about nonfinancial corporations – the ones that sell goods and services and make the economy go.

Those businesses hold $1.4 trillion. In absolute terms, that's the most ever. In relative terms, it's the most since World War II.

As investors, we can infer quite a bit from corporations' inability (or unwillingness) to deploy their cash.

For one, it indicates that business have assumed a very defensive stance.

Cash, of course, is a buffer against uncertainty - the uncertainty that business slows for any reason. Management wants a healthy cash reserve with which to pay the bills and remain liquid should anything unexpected happen. I think we can all agree that this is prudent, and a good business practice.

But $1.4 trillion? That tells me that businesses are not just a little jittery about the future. They're prepared for an apocalypse.

Think about this, it’s important;

If these businesses could conjure up even the most marginal of projects to earn a meager 1% return, they would generate $14 billion profit. Instead, they're sitting on the cash and earning near zero for a guaranteed after-inflation loss.

It's a bad omen that corporate management would forego a collective $14b per year. Clearly, by their judgment, the risk of investing in new projects outweighs the reward – the exact opposite of the conditions needed to produce healthy economic growth.

And to think they could avoid it all if they could just "play nice".

Do we need 4 or 5 "big" cellular companies? Internet providers? Insurance companies? All providing essentially the same service. Yet thats where the similarities end.

Get more product out, better quality, expand, employ more, keep costs low.

I often wonder if we could get off of fossil fuels if Bill Gates donated a fraction of his net worth.

Then you get into conspiracies which start to make some sort of sense


Hundreds of millions could probably end any problem today if it was spent in a common sense fashion. Find someone closest to getting the job done, then finance them. They could be the lucky few to fix some of the biggest problems rather than having those funds sitting in a bank, or these days, doesn't even exist!

I've read somewhere that the business model for large corporations was secretly changed in the early 1980's. Companies were expected to make as much profit as possible and bank it for themselves. Only fix what needs fixed without splurging income costs and absolutely produce as much gain as possible.
All risks set aside and fines paid because the profits alone could cover the costs of negative impacts.

That would make sense today, because if you look around...that is the business model.
Profits first, everything else last.

Whereas before the 80's it was more of quality first or customer first.
Maybe those high ranking CEO's were told of things to come in all those Bilderberg meetings.
So they can make as much profit as possible to usher in a new type of economy.
A new world economy?

Just my $0.002

Originally posted by havok
I've read somewhere that the business model for large corporations was secretly changed in the early 1980's. Companies were expected to make as much profit as possible and bank it for themselves. Only fix what needs fixed without splurging income costs and absolutely produce as much gain as possible.
All risks set aside and fines paid because the profits alone could cover the costs of negative impacts.

That would make sense today, because if you look around...that is the business model.
Profits first, everything else last.

Whereas before the 80's it was more of quality first or customer first.
Maybe those high ranking CEO's were told of things to come in all those Bilderberg meetings.
So they can make as much profit as possible to usher in a new type of economy.
A new world economy?

Just my $0.002

Well I for one can't wait for the game to conclude.

I'm sure people aren't as docile and ready to receive orders as they think we are.

It will be interesting to say the least. The way things are moving, I may see it in my lifetime. It will be one hell of a story if we go somewhere when we pass.

reply to post by cconn487


Don't you know? We can't have nice things only patent attorneys suing over zero-length swipes (aka - touching the screen).

I'm suprised nobody has mentioned the FED yet, isn't thier charter up in Jan 2013, I recall reading about it on ATS a couple of times, I was telling a friend about it, and he didn't know what I was talking about, does anybody else know about the FED and thier 100 yr charter ?.

If it's true then what are the implications of it, new Currency, NWO with new currency ?, I'm not enough of an expert to understand the whole thing, but if some sort of RESET happens, I am worried that it won't be good for a lot of people, lets hope I'm wrong though.




Peace

lets not forget the hidden "offshore economy" and the vast holdings most American corporations have invested with offshore banks

I think somethings up....Things have gotten really weird the last 6 months....

Can't quite put my finger on it, But without revealing what industry I work in, I can see trouble brewing....

We are being told we have supplier problems, But literally EVERY SUPPLIER?


January seems to be the goal for some reason......

So many options too!

2012 madness?
World War?
The American elections?
The coming of Heysous?

Yup! Sumpin's up

Originally posted by IrVulture
I think somethings up....Things have gotten really weird the last 6 months....

Can't quite put my finger on it, But without revealing what industry I work in, I can see trouble brewing....

We are being told we have supplier problems, But literally EVERY SUPPLIER?


January seems to be the goal for some reason......

So many options too!

2012 madness?
World War?
The American elections?
The coming of Heysous?

Yup! Sumpin's up

And why can't you reveal what industry you work in?

The only position that will survive the fiscal cliff is a deleveraged one. The vicious cycle of foreclosures and repossessions has inundated not only individuals, but small and large businesses alike. Unlike the financial collapse of 2008, the upcoming fiscal cliff will have no bail outs in effect. The businesses that shut down will remain so, as will the banks that are not capitalized to withstand the financial storm of economic uncertainty. One simple example for my readers is this: Every loan written has been an adjustable rate product, this is the truth, look closely at the fine print in your closing doc, you will find a five year out for the lender even if it was written for thirty, fifteen, ten, or any term. Yes your secure fixed rate loan will go adjustable just like everyone else's! Try making payments that will be three to five times higher that they are now! That's the banking system Americans are stuck with! and that's what most successful corporations are aware of!

Originally posted by bg_socalif

Originally posted by IrVulture
I think somethings up....Things have gotten really weird the last 6 months....

Can't quite put my finger on it, But without revealing what industry I work in, I can see trouble brewing....

We are being told we have supplier problems, But literally EVERY SUPPLIER?


January seems to be the goal for some reason......

So many options too!

2012 madness?
World War?
The American elections?
The coming of Heysous?

Yup! Sumpin's up

And why can't you reveal what industry you work in?

Because I could easily be identified, and summarily fired.....

Prolly won't matter in the end anyway...

As an assistant manager for a national farm supply store... the word we are receiving is that our company is being financially conservative with inventory and expenses. Why spend money on inventory if no one can buy it?

Further, not knowing what the future holds with the election and possibly 4 more years of Pres. Obama, the onset of "Obamacare", the possible higher punitive taxes for corporations, EPA -FDA -and US Dept Labor restrictions which will impact our core customers... Farmers.... we are sitting on our money.

Our customers are sitting on their money too. Each farm is in and of itself, a business. Also, we serve many small businesses with tools, air compressors, trailers, mowers, ... be they mechanics, landscapers, construction, loggers, construction, etc. All have seen a down turn in business and are scared to death of further taxes and regulation.

The biggest financial apocolypse facing businesses is 4 more years of Obama.

Hi, I am a small business owner, albeit small, I treat my business just as a large corporation would. The holding of cash reserves is one thing we are doing to offset future problems, and yes we do see them coming.
I look at several things when I decide wether or not to make a large, but possibly unneeded item purchase. If I can get by without it, I do, why? Because I suspect like many others out there that our future is very unstable at the moment.

Theres too much at stake for me to put my company in jeaprody, since it is one of the principal incomes for my family, I simply cant take the chance that I might lose it. So I conserve what cash I have, purchasing only what I know I can use to increase the companies income. I havent hired any employees, but I dont need them, so to do so would be a waste of money.

I provide goods, so I am in my own way stirring the economy, and since I sell something everyone needs, I stir it even more- I sell food, vegetables to be exact, there are very few people who do not need what I supply, and there is always a market for my product.

As for the question about the change in business models. Yes we did see a big shift in business models in the 80's, it was the "me" generation after all. But, I hated that, It broke the golden rule of business, " The customer is always right".
So in a effort to remedy that my business has returned to the "old" way of doing things. Customer service is KEY, its all about them. Presentation, ambience, taste, looks, etc. Even delivery locations and times.
Its paid off with loyal customers, who return, and rave about our service to anyone who will listen.

What Rossa said.

Cash holding is a defensive position. I think a big part of it is the uncertainty of the market place. We honestly don't know what the future holds in terms of government regulations or an economic shift if another sector fails.