Just to continue how

Just to continue how companies are actually cash-rich and not re-investing but hoarding – can it be described as a capitalist strike? – these links may be useful.The FT writes that in 2006, corporate treasuries placed a mere 23 per cent of their funds in banks. But 2011, the proportion of funds sitting in banks doubled – and this year it rose above 50 per cent. Companies are eschewing capital market products, since they think that the returns are too low to justify the risk.Another factor that is prompting this flight towards the bank is a perception that bank deposits are relatively safe, if they are Federal Deposit Insurance Corp insured. Thus, the favorite destination for treasurers now is a non-interest bearing account, which carries a FDIC stamp. Never mind that this is producing negative returns; it does at least promise to return the cash. And that is important in a world where 98 per cent of treasurers are now also telling the AFP that their top priority is to protect their money, not earn yield.It could take years before they really start feeling confident enough to take long term investment bets again. The velocity at which money moves around the system – and cash is used in a productive way – may have now slowed in a more permanently; doubly so since the banks themselves are very risk averse and wary of lending. A corporate freeze is a world where money has slower velocity is also a place where it will be harder to produce growth.Companies could return to the capital markets again. History suggests that greed usually triumphs fear, in the end.http://www.ft.com/intl/cms/s/0/e234e886-cc38-11e1-9c96-00144feabdc0.html#axzz20VC9pG00This story seems to be verified by this article in Business Insiderhttp://www.businessinsider.com/the-world-is-experiencing-the-opposite-of-a-sovereign-debt-crisis-2012-7Borrowing costs for government are plummeting everywhere. US 10-Year Treasury, which is once again within a few basis points of an all-time low. Australian 10-yr bonds are at new lows. What this essentially means is that there’s a lot of money out there that sees no productive investments in the real world, and thus people are willing to stick it with entities that promise them a very meager return. It’s not about governments reaching their end-game. It’s about a growth-deficient world, governments being the one place that can absorb all this money.