“Why Are Corporations Hoarding Trillions?”
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alanjjohnstone wrote:After the Panama Paper leak we now have the Paradise Paper leaks. One reason American corporations are hoarding is that they expect tax relief to be passed by Trump shortly on foreign earnings repatriated.https://socialismoryourmoneyback.blogspot.com/2017/10/cheating-system-it-is-system.htmlNor would bringing back the cash-hoard help the economy but merely fill the purses of the privileged even more.https://socialismoryourmoneyback.blogspot.com/2017/10/tax-reform-to-benefit-rich.html
https://www.youtube.com/watch?v=XbFf61k1gEQ. Here is the answerhttps://www.youtube.com/watch?v=ZTupDJxTork
DJP wrote:The point of capitalism is to invest capital *with a view to making a profit* If those profits are not there to be had the capital does not get invested..That money has been used as collateral to borrow more money and they have been invested in others areas of the capitalist economy including real estate, the rate of interest that they are going to pay is less than the amount of taxes that they must pay to the state. For example, banks never build buildings and branches with their own money, they borrow money from others banks using their own collaterals. As Alan said they are waiting for a huge tax cut, and probably, they are going to get it and they have brainwashed the minds of the workers telling them that it is going to produce more jobs.
AMY GOODMAN: …We use language like “tax cuts,” “tax relief.” But is there another way to describe, to refer to the one-and-a-half trillion dollars in austerity?YANIS VAROUFAKIS: Class war. It’s an out-and-out class war waged against the poorest, the weakest, the disenfranchised—the very same people that Donald Trump appealed to in order to get elected.Warren Buffet: There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.
alanjjohnstone wrote:AMY GOODMAN: …We use language like “tax cuts,” “tax relief.” But is there another way to describe, to refer to the one-and-a-half trillion dollars in austerity?YANIS VAROUFAKIS: Class war. It’s an out-and-out class war waged against the poorest, the weakest, the disenfranchised—the very same people that Donald Trump appealed to in order to get elected.Warren Buffet: There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.The so-called Health Care act reform proposed by Donald Trump and the Republicans, it is also a tax cut for the capitalist class, and many workers believed that lie, it will eliminate large taxation from the surplus value of the rich peoples.
robbo203 wrote:Marcos wrote:Some experts estimate that it is around 2.5 trillion, but the real amount is 9.2 trillion and most of that pile of money is kept in others countries. The main purpose is to avoid taxation on that large amount of money, and several governments ( especially the USA ) have tried to give them a certain low tax incentive to repatriate the money, but they are still keeping them outside. There are already some countries offering zero taxation to foreign investment which means that most of that money will not be repatriated to the US or to Europe for investment. They are not going to invest that chunk of money in the USA when they can produce more profits in others countriesThe problem is, Marcos, that this doesnt really explain why such idle money is hanging around in the first place, Sure you can shift it to a low tax regime or even a no tax regime but if it is just being parked there what is the point? Also you say that these capitalists in Amercia and elsewhere are "not going to invest that chunk of money in the USA when they can produce more profits in others countries" but the point is they are not being capitalised as I understand it – that is they are not being used to produce more profit anywhere regardless of the tax situation. I can perfectly understad your argument that if they want to obtain more profit they would shift that money to a country where there was lower taxation. But the real mystery is that they dont seem to want to use that money for that purpose in the first place. Its just stting there doing nothing as the article says I can only assume that it is for some long term strategic reason that they are holding back from investing this money. It is in an attemt to find out what precisely that reason is that I posted this iterm Incidentally, do you have any links relating to the above figures you cite. I would be very interested
Though the amount being held overseas now tops the U.S. total, companies are still holding $1.94 trillion in cash domestically, the highest in two years, according to the latest Federal Reserve data. That's part of a larger story of trillions in money lying fallow around the country — zero-yielding money markets are holding $2.66 trillion in investor cash, and banks are storing $2.15 trillion in excess reserves at the Fed. In just those four categories, that's some $9.25 trillion in available cash doing nothing. "Even if the cash was brought home, it would be unlikely to lead to the surge in investment that many hope for. After all, most firms already have large reserves of domestic cash and face record-low borrowing costs," Hunter said. Jeff CoxFinance Editor
This report from 2012 shows that there were 32 trillions of dollars in offshore havenshttps://www.reuters.com/article/us-offshore-wealth/super-rich-hold-32-trillion-in-offshore-havens-idUSBRE86L03U20120722
Our blog has more than once posted figures on Tax Havens.The latest cites Gabriel Zucman who estimates 7.9 trillion euros ($9.1 trillion) are sitting in offshore tax havens.Another cites the fact America's most profitable corporations in 2016 had $2.6 trillion deposited overseas in over 9,000 subsidiaries in various locations. Apple, which "holds at least $246 billion offshore, a sum greater than any other company's offshore cash pile," would owe $76.7 billion in U.S. taxes if this profit was not overseas;Citigroup, which stashes $47 billion overseas, would owe $13.1 billion in U.S taxes; andNike, which holds $12.2 billion offshore, would owe $4.1 billion in U.S. taxes https://socialismoryourmoneyback.blogspot.com/2017/10/cheating-system-it-is-system.htmlEuropean high-net worth individuals with a total wealth of more than $14.7 trillion are holding close to 24 percent of their portfolios in cash, the most since 2013, according to analysts at Bank of America Merrill Lynch.https://www.bloomberg.com/news/articles/2017-10-10/rich-europeans-with-14-7-trillion-may-spur-euro-credit-inflowsA bit dated – 2013 – cash liquidity Microsoft topped the list of American tech companies with the biggest overseas cash hoards, according to Bloomberg Rankings. Microsoft had $76.4 billion in foreign profits in its books last year, all of which untaxed by the U.S. IBM came in a distant second with $44.4 billion, and Apple with $40.4 billion. Intel reported cash and investments of $17.4 billion at the end of the latest quarter.Cisco reported it has an incredible $50.6 billion in cash, up more than $3 billion from the previous quarter.In India, it is a similar story. Coal India was sitting on a cash- pile of Rs 62,236 crore as of March 31. Reliance Industries had Rs 50,456 crore kitty. BHEL was possibly the richest capital goods firm in terms of cash holdings with reserves of Rs 6,734 crore . NTPC (Rs 18,091 crore) and NHPC (Rs 7,795 crore) in the power industry and Tata Steel (Rs 9,859 crore) and SAIL (Rs 6,662 crore) in the steel sector. [1 crore = 10 million rupees = US$153,000]https://socialismoryourmoneyback.blogspot.com/2013/09/profits-boom.htmlAgain from 2013https://socialismoryourmoneyback.blogspot.com/2013/02/is-it-spend-spend-spend-again.html Apple has accumulated $137 billion pile of cash. In the last quarter alone it added including $23 billion to its cash flow from operations. Early last year, Apple's cash balance had built to a point beyond what they needed to run their business, so they announced a plan to return $45 billion to shareholders over three years. As of this week Apple has executed $10 billion of that plan.
Quote:According to the Federal Reserve, as of the third quarter of 2012 nonfinancial corporations in the United States held $1.7 trillion of liquid assets – cash and securities that could easily be converted to cash. Nonfinancial corporations historically held liquid assets of 25 to 30 percent of their short-term liabilities. But this percentage began rising in 2001 and now tends to be in the 45 to 50 percent range. In the third quarter of 2012, it was 44.9 percent. Juan Sánchez and Emircan Yurdagul of the Federal Reserve Bank of St. Louis looked at the ratio of cash to assets at all publicly held nonfinancial, non-utility corporations. They found that, historically, such corporations held cash equal to about 6 percent of their assets, but that began rising in 1995 and is now more than 12 percent. Bank deposits hit records in Germany, Italy, the Netherlands, Belgium, Austria and Finland. Capitalists are putting their money in banks even as interest rates are at their record lows and it has enabled banks to bulk up on their own deposits by paying out such low rates.What else can you do but hoard, if profit prospects by investing isn't promising. Too much investment leads to too much capacity, output or inventory, which only floods the market collapsing prices, compromising returns and profits further. However, the situation could change. Companies are beginning to put some of their cash stockpiles to work. “A huge amount of liquidity has been sitting in cash or negative yield bonds out of fear,” says one private equity executive. “As that recedes, a wall of money is flowing into financial assets. Liberty Global, the US cable group declared that it would buy Virgin Media for $23.3bn, for instance. The surplus of cash that drove so many huge, flawed deals at the height of the boom may be back. Bain & Co, the consultancy, forecasts a “superabundance of capital” between now and 2020. It estimates that the world’s financial assets will outbalance its gross domestic product by 10 to one – it will have $900tn of financial assets compared with $90tn of GDP by 2020. The result will be “a world that is structurally awash in capital” chasing few opportunities. “Capital superabundance will increase the frequency, intensity, size and longevity of asset bubbles. The propensity for bubbles to form will be magnified as yield-hungry investors race to pour capital into assets that show the potential to generate superior returns,” the report concludes. Investors are not risking money on venture capital entrepreneurs but choosing well-known enterprises on a firm footing and using their earnings to gain better returns than cash or government bonds.A year later we blogged "Financial engineering to avoid paying taxes is another boost to profits, and thus a competitive advantage. Other corporations, under the rigors of competition and the ceaseless necessity of expansion and pressure to increase profits, are compelled to copy these innovations. However much we might wish to morally condemn such behavior, the personality of corporate executives is irrelevant. Expand or die is the remorseless logic of capitalism, and the executive who doesn’t do everything possible to maximize profits will soon be replaced by someone who will."
Quote:Many of the profits kept ‘offshore’ are actually housed in U.S. banks or invested in American assets, but registered in the name of foreign subsidiaries. A Senate investigation of 27 large multinationals with substantial amounts of cash supposedly ‘trapped’ offshore found that more than half of the offshore funds were invested in U.S. banks, bonds, and other assets. The Wall Street Journal revealed that many corporations, including Microsoft Corp. and Google Inc., “keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities.” Under federal tax law, those funds are “offshore” and thus exempt from taxation. Apple holds more money offshore than any other company — $111.3 billion. It would owe $36.4 billion in U.S. taxes if these profits were they not offshore for tax purposes.https://socialismoryourmoneyback.blogspot.com/2014/06/fiddling-tax-while-world-burns.html
The Americans workers say that the capitalists are not corrupted because they have money, and they deserve to be rich because they work hard, which means that, the poor are corrputed because they do not have money., and they do not have money because they do not work harder A class shooting to itself. Accumulation of capital is corruption because it is sweat stolen from the working class, and capitalist without corruption it is also an explotative system. Based on that wrong conception the US workers elected a billionarie to be president. Corruption is the product of a corrupted economical system which survives from the exploitation of the working class, it is part of the 'morality' of capitalism. That is corruptionhttps://www.worldsocialism.org/spgb/socialist-standard/1980s/1984/no-960-august-1984/book-review-corruption-and-misconduct-contemporary-
Do we know that this hoard is unusual? Are there any historical comparisons available?
From:https://u.osu.edu/stulz.1/files/2016/05/Determinants_cash-holdings-1w4ptsv.pdf
Abstract wrote:The determinants and implications of corporate cash holdingsq Tim Opler!, Lee Pinkowitz!, ReneH Stulz!,*, Rohan Williamson": We examine the determinants and implications of holdings of cash and marketable securities by publicly traded U.S. firms in the 1971-1994 period. In time-series and crosssection tests, we "nd evidence supportive of a static tradeo! model of cash holdings. In particular, "rms with strong growth opportunities and riskier cash #ows hold relatively high ratios of cash to total non-cash assets. Firms that have the greatest access to the capital markets, such as large "rms and those with high credit ratings, tend to hold lower ratios of cash to total non-cash assets. At the same time, however, we "nd evidence that "rms that do well tend to accumulate more cash than predicted by the static tradeo! model where managers maximize shareholder wealth. There is little evidence that excess cash has a large short-run impact on capital expenditures, acquisition spending, and payouts to shareholders. The main reason that "rms experience large changes in excess cash is the occurrence of operating losses. (1999 Elsevier Science S.A. All rights reserved.Johnny Caspar: So it's clear what I'm sayin' ?Leo Bannion: As mud.
Ludwig wrote:Do we know that this hoard is unusual? Are there any historical comparisons available?It is not so unusual. They have been doing that since 1950. The biggest hoarding of capital takes place at the point of production whereas a bunch of thieves known as capitalists steal all the sweat from the world working class, and they have been doing that for several centuries. What we have to do is to adquire socialist consciouness and send the capitalist sto the fucking hell and eliminate the system of profits. Fighting for taxation will not resolve our problems
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