US companies have large hoards of cash

[twintornados]

link

 

Gives more credence to the idea of a stock re-purchase plan at some point down the road...

Edited October 27, 2010 by twintornados

[jpd80]

link

 

Gives more credence to the idea of a stock re-purchase plan at some point down the road...

 

I think you'll find that Ford is heavily into debt reduction by selling assets and convertible notes....

The stock price is a secondary concern to that....reducing debt by $10 billion saved $800 million interest.

Edited October 27, 2010 by jpd80

[ausrutherford]

Keep the taxcuts and cut the national debt...and the companies will open up the coffers.

 

Until then they will save in fear of a deeper recession/depression caused by the overspending and tax hikes.

[Marginal Economist]

Ford needs to have 15-20B cash just to meet payroll, buy parts, buy raw materials, and pay the rest of the bills. As a top 10 company in revenue, I'd expect they should be top 10 in cash on hand as well. The article is a bit misleading. I'd like to see how much of the cash is turning over each month.

[4d4evr-1]

Ford needs to have 15-20B cash just to meet payroll, buy parts, buy raw materials, and pay the rest of the bills. As a top 10 company in revenue, I'd expect they should be top 10 in cash on hand as well. The article is a bit misleading. I'd like to see how much of the cash is turning over each month.

 

It was stated last year that Ford required about 14 Billion to keep running IIRC. If true that leaves about an 8 billion safety net. I think I can also say with all of the new vehicles brought to market plus announced new vehicles and new power trains in new and updated vehicles that Ford is spending a leading amount in R&D. I just hope and believe thet will continue to make good decisions about now and the future concerning growing a profitable FoMoCo.

 

I know that was awfully long and I will finish with ITAM.

 

4D4EVR

[tjl]

Keep the taxcuts and cut the national debt...and the companies will open up the coffers.

 

Until then they will save in fear of a deeper recession/depression caused by the overspending and tax hikes.

 

Major parts of the 2010 US government budget are:

 

19% Social Security

19% Military

12% Medicare

10% Health (probably including Medicaid)

5% Interest

 

Note that even if everything else were cut to zero for 2010, the US government budget would still be in deficit.

 

Given that all of the above have very strong political interests behind them, it will take a lot of political will that is currently lacking among both politicians and voters to eliminate the US government budget deficit through cutting spending.

[RichardJensen]

That list is asinine.

 

Try posting NET cash you dimwits.

[aneekr]

That list is asinine.

 

Try posting NET cash you dimwits.

I agree that the emphasis on the asset side alone of these companies' balance sheets (and specifically current assets that are not inventory or AR) isn't very meaningful. But I get the impression the article simply wanted to underscore Moody's point about "jobless recovery", M&A activity, share repurchases, etc, not analyze working capital management at the firms listed.

[blazerdude20]

why is apple not on this list? according to their latest financial results they have $51 billion in cash.

 

all of these companies cycle lots of this money on a monthly basis.

[Noah Harbinger]

why is apple not on this list?  according to their latest financial results they have $51 billion in cash.

 

all of these companies cycle lots of this money on a monthly basis.

 

Because as we all know, Apple is going out of business any day now

 

(Ahh, for the good ol' days... when Apple was a computer company, and people thought you were weird for using a Mac...)

[BORG]

That list is asinine.

 

Try posting NET cash you dimwits.

 

+1

[Biker16]

Keep the taxcuts and cut the national debt...and the companies will open up the coffers.

 

Until then they will save in fear of a deeper recession/depression caused by the overspending and tax hikes.

the tax cuts have to go.

business needs predictability. The political climate creates uncertainty, most of our economic growth comes from small business, they can't get the credit they need to grow.

 

debt and taxes will be fixed when the economy starts to grow, we are still 600 billion short in tax revenue vs before the recession.

[NickF1011]

Major parts of the 2010 US government budget are:

 

19% Social Security

19% Military

12% Medicare

10% Health (probably including Medicaid)

5% Interest

 

Note that even if everything else were cut to zero for 2010, the US government budget would still be in deficit.

 

Given that all of the above have very strong political interests behind them, it will take a lot of political will that is currently lacking among both politicians and voters to eliminate the US government budget deficit through cutting spending.

 

Well, political wills are going to have to change. Current spending trends will utlitmately lead to our ruin. All of Washington knows it, but every politician is too damn cowardly to be first to do anything about it.

[Versa-Tech]

Major parts of the 2010 US government budget are:

 

19% Social Security

19% Military

12% Medicare

10% Health (probably including Medicaid)

5% Interest

 

Note that even if everything else were cut to zero for 2010, the US government budget would still be in deficit.

 

Given that all of the above have very strong political interests behind them, it will take a lot of political will that is currently lacking among both politicians and voters to eliminate the US government budget deficit through cutting spending.

Sadly, with the military being the only exception; I never have nor ever will see any benefit from any of the services on that list. Don't get me wrong; I've been without health care most of my life, starved for years at a time, even been homeless for a long period of time. However, I was raised to take responsibility for my actions... so I did. As far as social security goes, we all know that's going down the drain

[soupy]

Sadly, with the military being the only exception; I never have nor ever will see any benefit from any of the services on that list. Don't get me wrong; I've been without health care most of my life, starved for years at a time, even been homeless for a long period of time. However, I was raised to take responsibility for my actions... so I did. As far as social security goes, we all know that's going down the drain

 

Just think of all the company you could of had had there not been SS. Very sad indeed.

[Noah Harbinger]

Sadly, with the military being the only exception; I never have nor ever will see any benefit from any of the services on that list. Don't get me wrong; I've been without health care most of my life, starved for years at a time, even been homeless for a long period of time. However, I was raised to take responsibility for my actions... so I did. As far as social security goes, we all know that's going down the drain

 

So what you are saying is that for $1 you will sell me the right to your entire future interest in social security?

[Marginal Economist]

So what you are saying is that for $1 you will sell me the right to your entire future interest in social security?

Can I opt out now? I'll let the gov't keep everything I've already put in (14 years), but stop taking anything else from me and I'll forgo any future claims. Fair enough?

[mercurymichael]

Can I opt out now? I'll let the gov't keep everything I've already put in (14 years), but stop taking anything else from me and I'll forgo any future claims. Fair enough?

 

I wish this was an option! 25 years in to it and I would still walk away from it all if I could. I feel I can do much better saving on my own than letting Washington piss it away!

[RangerM]

Can I opt out now? I'll let the gov't keep everything I've already put in (14 years), but stop taking anything else from me and I'll forgo any future claims. Fair enough?

The SS deductions from your paycheck are legally defined as "contributions", hence Federal Insurance Contributions Act (What FICA on your check stub means). It is nothing more than a means to take money from you and give it to someone else. (with the government getting its cut)

 

By the letter of the law, your contributions only mean that so long as there is a system, you are eligible to claim benefits. Given the solvency of the current program (now and going forward) you have no claim, but (for now) they can still force you to contribute.

Edited October 30, 2010 by RangerM

[Noah Harbinger]

People seem to be under the miscomprehension that social security will disappear altogether, that they'll get nothing for all their payments. Well, the only way that will happen is if we let the GOP get their way to shut it down altogether.

 

The impending disaster that everyone speaks of is that social security taxes will only cover 75% of promised benefits.

 

If nothing changes, well, just expect a smaller check than you're currently promised. That will be a disaster for people who expected to depend entirely on social security for their retirement, but really, how many people fall into that category?

[Marginal Economist]

People seem to be under the miscomprehension that social security will disappear altogether, that they'll get nothing for all their payments. Well, the only way that will happen is if we let the GOP get their way to shut it down altogether.

 

The impending disaster that everyone speaks of is that social security taxes will only cover 75% of promised benefits.

 

If nothing changes, well, just expect a smaller check than you're currently promised. That will be a disaster for people who expected to depend entirely on social security for their retirement, but really, how many people fall into that category?

 

So if they shut it down now, can I stop contributing? Let the current retirees spend their investments. It's not like our government would have spent the projected surplus.

[RichardJensen]

It is nothing more than a means to take money from you and give it to someone else.

So's life insurance.

 

The problem with SS is that it has never been treated as what it really is "old people insurance"

 

Life insurance operates under the the law of large numbers. That in any given year, among any given set of people only a very small number are going to die. Say one out of every 250 people 30-35 will die in any given year.

 

Therefore if all 250 people chip in $1, they can pay $250 to the family of the 30-35 year old who died. The guy who dies pays his buck, and gets $249 along with it. It's a huge return on his 'investment' because it's *not* an investment.

 

Social Security is functionally equivalent, although the government has always portrayed it (including the statements mailed out on a regular basis) as an investment. It is fundamentally *not* an investment. It's an insurance policy that pays off when you reach a certain age.

 

The problem is people are living longer and nobody wants to:

 

1) pay more

2) retire later

3) accept fewer benefits.

Edited October 30, 2010 by RichardJensen

[RangerM]

So's life insurance.

...which is optional. An important distinction.

The problem with SS is that it has never been treated as what it really is "old people insurance"

 

Life insurance operates under the the law of large numbers. That in any given year, among any given set of people only a very small number are going to die. Say one out of every 250 people 30-35 will die in any given year.

 

Therefore if all 250 people chip in $1, they can pay $250 to the family of the 30-35 year old who died. The guy who dies pays his buck, and gets $249 along with it. It's a huge return on his 'investment' because it's *not* an investment.

 

Social Security is functionally equivalent, although the government has always portrayed it (including the statements mailed out on a regular basis) as an investment. It is fundamentally *not* an investment. It's an insurance policy that pays off when you reach a certain age.

It could also be equated to a pyramid scheme. The beneficiaries are not the contributors, but the people the money is transferred to, which also includes the disabled, widows, or children.

 

Now that the base of the pyramid is getting smaller, you end up with......

The problem is people are living longer and nobody wants to:

 

1) pay more

2) retire later

3) accept fewer benefits.

.....a trifecta of negative options. It's not like you could choose to impose any one (or two) of the three and expect a rosy outcome.

 

Given the differences in life expectancy between sexes and races, I'd think more black males would be in favor of ending SS.

[RichardJensen]

...which is optional. An important distinction.

The question of adverse selection and the societal costs of the elderly and disabled starving to death come into play.

 

Adverse selection is the notion that only those who need insurance buy it, thus creating an ever shrinking pool of participants. As the premiums increase it weeds out more and more participants in what's known as the insurance death spiral.

 

http://en.wikipedia.org/wiki/Death_spiral_%28insurance%29

 

If FICA were optional, few would participate. The costs per participant would rapidly increase, more and more participants would drop out and the program would fail in short order.

 

In an environment where few families will undertake financial responsibility for their elderly and disabled relatives (more's the pity), it becomes necessary for the society as a whole to assume these costs.

 

This is the system that the US devised. It is far from perfect, but that is hardly proof that having no system at all would be better.

It could also be equated to a pyramid scheme. The beneficiaries are not the contributors, but the people the money is transferred to, which also includes the disabled, widows, or children.

It is fundamentally not equivalent to a pyramid scheme, as a pyramid scheme requires a continual influx of new investors, whereas an insurance plan simply requires a proper balance between beneficiaries and participants.

[RangerM]

If FICA were optional, few would participate. The costs per participant would rapidly increase, more and more participants would drop out and the program would fail in short order.

But that is the fundamental problem of Social Security completely.

 

The ratio of contributors to beneficiaries is going down (ie. fewer contributors per beneficiary). People "opted" to have fewer children. In Europe, they "opted" to let in more immigrants, which is how you wind up with 'Muhammad' ranked most popular boys' name in England‎.

It is fundamentally not equivalent to a pyramid scheme, as a pyramid scheme requires a continual influx of new investors, whereas an insurance plan simply requires a proper balance between beneficiaries and participants.

Given that Social Security benefits are paid with current FICA revenues, exactly HOW does Social Security NOT depend upon a continual influx of new investors contributors?

 

There is no "balance". Everyone is assumed to be a beneficiary (upon reaching a certain age), and everyone is a contributor (with certain exceptions) prior to reaching that age. If there were balance, the ratio of contributors-to-beneficiaries would remain static.

Edited October 30, 2010 by RangerM