primitives discuss why unemployment is happening

[franksolich]

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8751955

Oh my.

Now we know.

jpljr77 (414 posts)      Thu Jul-15-10 07:47 AM
Original message
 
U.S. companies aren't hiring because of the economy, right? Wrong.

This story is starting to gain traction. NPR ran a version of it yesterday, and now the Washington Post is picking it up (excerpted below).

Yesterday, I saw a post here about wealthy Americans hoarding cash. U.S. companies are doing the same. With earnings season underway, we're going to hear about more companies doing just fine (JP Morgan beat expectations this morning, btw). So why aren't they hiring? Could it be politics?

Yes. And guess which group is leading the charge in advising companies to not hire:

Corporate America is hoarding a massive pile of cash. It just doesn't want to spend it hiring anyone.

Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms' coffers.

Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?

The answer to that question has become a political flash point between the White House and big business groups such as the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.

HughBeaumont  (1000+ posts)        Thu Jul-15-10 07:50 AM
Response to Original message
 
1. Because they want America under their absolute and unquestioned power.

Not that they don't have it already, but the nudity of the Plutonomy will be out of the open instead of behind a changing door.

Corporate America is holding America hostage.

Cal33 (358 posts)       Thu Jul-15-10 08:08 AM
Response to Reply #1
 
11. "Corporate America is holding America hostage"

Yes. And they know that millions are going hungry and are in despair, and some of these will starve to death.

Does it bother their consciences at all? Nope. They want to make still bigger profits. These guys are sociopaths. Criminally sick Al Capones! Human lives are nothing more than tools to be used for profit, and discarded when they are no longer of further use.

Sounds pretty primitive to franksolich.

hack89 (1000+ posts)      Thu Jul-15-10 07:53 AM
Response to Original message
 
2. Could it also be that credit is harder to get?

and they need cash on hand? And with evidence that even the employed are spending less and concentrating on reducing personal debt, why wouldn't a company hold off on producing more goods until it was certain that spending would increase? Somewhat a chicken and egg problem but companies are not going to hire people just on the hope that it will increase consumption.

SkyDaddy7  (1000+ posts)      Thu Jul-15-10 08:09 AM
Response to Reply #2
 
12. Credit is easy for Corporations...not small business...It really seems the banks & corporations are doing what they can to make Obama look bad so that the Republicans can delay until they take power. I sure hope that is not what is going on but something smells!

xchrom (1000+ posts)        Thu Jul-15-10 07:54 AM
Response to Original message
 
3. could be two pronged -- one is power and control but the other could very well be about a prolonged downturn expected in the stock market and a position that would be wise to hold cash.

jpljr77 (414 posts)      Thu Jul-15-10 07:57 AM
Response to Reply #3
 
6. Perhaps, but why hold all that cash when credit is so cheap?

Credit, while still hard to come by, is cheaper than it's ever been. A smart company with a good credit rating and business plan could really do well right now with a very large credit facility, the terms of which would make peers blush five years from now.

Turbineguy  (1000+ posts)      Thu Jul-15-10 08:03 AM
Response to Reply #3
 
8. And when it hits bottom go private.

The Wallstreetsters have shit in their own nest again, as they are wont to do from time to time.

KharmaTrain  (1000+ posts)        Thu Jul-15-10 07:56 AM
Response to Original message
 
4. Investors First And Foremost...

The biggest reason jobs aren't happening is because this country is flat broke. The rich may have tons of money and their investors are getting their dividends (which keep the powerful in power), but those earnings are despite our consumer market not because of it. Since so many are multinationals, the earnings could be coming from half a world away or from outsourcing and downsizing.

The small guys are suffocating under a credit crunch...as you and that article mention, money is being horded as the banksters are using it against this administration and the working class to keep their juicy tax cuts and perks. They don't feel the suffering of millions but are exploiting it through their many political connections.

We've maxed out the cards...it was due to happen and we're dealing with a new economy where credit becomes a new form of servitude. It's already happening when one's "credit rating" becomes as important as their birthdate. Sadly this administration has squandered the opportunity to restore some fiscal balance.

ixion  (1000+ posts)        Thu Jul-15-10 07:57 AM
Response to Original message
 
5. They know the extent of the mess they've created and they know what lies on the path ahead, despite all the flowery talk of recovery.

It's called "prepare for the worst," at least that's what it sounds like to me.

BootinUp  (1000+ posts)      Thu Jul-15-10 08:01 AM
Response to Original message
 
7. Let me re-phrase your conspiracy theory as I understand it.

Assuming there was sufficient demand, companies will not hire to enable them to compete for that business because of politics?

Have I got that right?

lunatica  (1000+ posts)        Thu Jul-15-10 08:05 AM
Response to Original message
 
9. Because they don't see enough profit in hiring more people

The bottom line. Period.

zipplewrath  (1000+ posts)      Thu Jul-15-10 08:13 AM
Response to Reply #9
 
14. Exactly

You don't hire people just to hire people. You hire people to produce something. Companies don't see business worth investing in so they don't have a need to hire people. They may be wrong of course, but that's basically the reason.

DCBob  (1000+ posts)      Thu Jul-15-10 08:07 AM
Response to Original message
 
10. The GOPer talking point is that firms are afraid to hire because they are uncertain...

about effects of healthcare, new taxes, cap and trade, etc, etc, etc... its all the Democrat's fault. And Faux is repeating this over and over and over. Pathetic.

fasttense (1000+ posts)      Thu Jul-15-10 08:12 AM
Response to Original message
 
13. The uber wealthy, and their minions including monopolies or corporations as we call them today, hoarded cash during the 1st RepubliCON Great Depression too. But frankly, I don't blame them. (I blame them for how they stole their wealth not for being wealthy) If I had wealth, I would be keeping it liquid and easily available. It just makes common sense. If the economy just crashed and 70% of the country's financial production (GDP) was faltering (consumer spending), you would want to prepare for the worst.

It is just a natural outcome of a seriously declining economy.

liberal N proud  (1000+ posts)        Thu Jul-15-10 08:24 AM
Response to Original message

15. Greed will consume all

TreasonousBastard  (1000+ posts)      Thu Jul-15-10 08:28 AM
THE PRIMITIVE FULL OF BEANS
Response to Original message

16. Does anybody here actually work for a living, preferably for...

something larger than the local grocery store? Why all the silly conspiracy talk and villain-hunting?

Companies spend money on capital and labor when they expect to get a return on that money. They are not employment programs keyed to hire more just because there are more people to hire. There have to be actual jobs for those people they hire-- things for them to do besides sit around and collect a paycheck while looking for a better job.

If Acme Widget Corp. sees a burgeoning market in widgets, it will buy more widget making machinery and hire widget machine operators, salespeople, warehouse people, office clerks and others to sell those widgets. If it doesn't see more widgets being sold, it will not waste money making more widgets to pile up in the warehouse and use its cash to trade Euros to make money. It might even lay people off, although that often costs them money in the short run.

Are there other things playing into all this? Sure, there always are, and nobody ever said the companies always guess right when looking at market trends, but on the bottom line they spend money to make money, not for social causes.

The Soviets used to brag about full employment when their factories would never fire anyone and would have 10,000 people making left shoes, assuming there were another 10,000 people making right shoes in another factory somewhere. We see how that ended.

Statistical  (1000+ posts)      Thu Jul-15-10 08:32 AM
Response to Original message
 
17. Right now the safest thing one can do (individual or company) is to hoard cash and pay down debt.

It is called tragedy of the commons.

http://en.wikipedia.org/wiki/Tragedy_of_commons

On an individual basis the best thing for the individual to do (both consumer and company) is to avoid large expenses, reduce spending, pay down debt. keep large cash reserve.

However on a macro-economic level that is the worst thing that can happen.

But I thought il Duce Bo was going to fix all this.

The primitives promised us he would.

One wonders what's up with that.

[Peter3_1]

The economic model the Pres. uses is just as false today as it was when Marx was alive and writing it down.  But the Pres. still believes and the yellow dogs atill hoel their suicidal support, death before recovery!

[Carl]

TreasonousBastard  (1000+ posts)      Thu Jul-15-10 08:28 AM
THE PRIMITIVE FULL OF BEANS
Response to Original message

16. Does anybody here actually work for a living, preferably for...

something larger than the local grocery store? Why all the silly conspiracy talk and villain-hunting?...

That had to be the most worthless question ever asked at the DUmp.

[SSG Snuggle Bunny]

DCBob  (1000+ posts)      Thu Jul-15-10 08:07 AM
Response to Original message
 
10. The GOPer talking point is that firms are afraid to hire because they are uncertain...

about effects of healthcare, new taxes, cap and trade, etc, etc, etc... its all the Democrat's fault. And Faux is repeating this over and over and over. Pathetic.

Don't stop there nuclear rocket surgeon extraordinaire, tell us WHY healthcare, new taxes, cap and trade etc etc etc should NOT negatively impact business. Tell us why businesses should see all this new crap piled on them and go, "Yipee!"

Please grace us with your economic acumen.

[Wineslob]

Damn the stewpig is strong .......

[jukin]

Throughout history countries and their citizens have done much better under all controlling governments. ZThe answer is more government.

[JohnnyReb]

DUmmies won't work for what they're worth........

Mexicans doing the jobs DUmmies are qualified for........

Unemployment checks are still coming in......

Union demands are to high.......

ACORN is hiring hookers if you can meet their standards....

[DumbAss Tanker]

Their knowledge of economics obviously remains as broad and deep as their knowledge of military affairs, I see.

Companies do nothing for purely political reasons, at least not successful companies that want to survive long-term.  If they support a candidate, it is because they see it as an issue of economic advantage, either positively in the sense of favorable policy goals or negatively in buying what's up for sale before a competitor or counter-interest buys it first (I.e. our sleazy bastards in Congress and the current White House).

If companies are holding cash now, it's not because they want to support one party or the other for some arcane political end, but because they are uncertain what stupid shit the Oministration is likely to try to do next during the Dems waning days controlling of Congress, and how it will impact them.  They aren't going to willingly commit their cash reserves into a highly-uncertain legal environment. 

This far from the election (Which is a million years away in business time for labor expense ROI, especially temp labor, though not so much for capital improvement expenditures), the possible effect of holding onto their cash on the outcome of elections in November is a ridiculously trivial consideration.