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| Is Lehman's Loss Wells Fargo's Gain? | |
| 2008-09-21 | |
The balance sheets of U.S. corporations as a whole, including many with headquarters in the Twin Cities area, are healthier than they've been in years. Corporate America was sitting on $14 trillion in cash in the second quarter, according to Federal Reserve flow of funds statistics. That's an 18 percent gain since 2002, after adjusting for inflation. Meanwhile, corporate debt over the same period rose only 8 percent. That means many companies will be able take advantage of strategic opportunities. "Clearly, the need to borrow is not that high," said Nariman Behravesh, chief economist at Global Insight, a leading economic forecasting firm based near Boston. "As a result, the corporate sector is somewhat insulated from this financial crunch that seems to be going on." | |
| Posted by:Frozen Al |
| #4 You only think there is a conflict here. It wasn't long after t-bills went negative in 1940 that the government had to introduce war bonds, because their budget was so stretched. FY '09 is going to be a bloody nightmare for the feds, as tax revenues may be double digit less than they were for FY '08. The top 20% of income earners pay 80% of the federal income tax. They make most of their money through investments, and it has not been a good year for investments. And 40% of all federal taxes are corporate taxes. This means a huge budget deficit, if spending is anything like it was this year. And a huge budget deficit, plus huge bailout payments, means a butt load of t-bill offerings. Right now, t-bills are one of the safest investments. But the more t-bills that are offered, the less safe they become. This is because the government does not pay yields via earnings, but by tax revenues. In effect, issuing t-bills to pay off the yields of other t-bills. This next year, interest on the federal debt along may equal defense spending. It is already the fourth highest expenditure in the budget, after HHS, Social Security, and the Pentagon. |
| Posted by: Anonymoose 2008-09-21 20:14 |
| #3 For the first time since 1940, the short term T-bill went into negative territory Moose in another thread you were saying TBills were worthless couldn't sell 'em for any soaring interest rate, let's work on the consistancy on our insanity okay? |
| Posted by: .5MT 2008-09-21 17:32 |
| #2 This has been coming on for a long time. These companies are hoarding cash to protect themselves from the chaos. That is, while they are building reserves, they are just sitting on them, not lending money. It means that until somebody breaks the ice and starts lending again, this money has been taken out of the economy. For the first time since 1940, the short term T-bill went into negative territory recently. This means that people were willing to pay the government to protect their money, instead of getting interest on that investment. It means that they weren't willing to lend it to *anyone* but the government. And that is bad. |
| Posted by: Anonymoose 2008-09-21 17:27 |
| #1 "Clearly, the need to borrow is not that high,"... So who has been doing all the borrowing that got us to this 'crisis'? Why are the turkeys in Washington talking about 'capitalizing' the market to support borrowing? |
| Posted by: Procopius2k 2008-09-21 16:50 |