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Small businesses sitting on cash and not hiring

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  • Small businesses sitting on cash and not hiring

    Companies do not do anything. People do. And people are making some educated and very rational guesses about the future. In my own little company—fewer than 100 people—our health insurance costs went up nearly 25 percent, and that was the cheapest alternative of many more expensive choices. Our current provider gave us a bid that was up more than 125 percent. "We" would like to hire. But now? Nope.

    Another thing: "Companies" do not fire people. "We" fire people and it is incredibly hard and sad to do. So, it is human nature to make sure there is enough business ahead of us so we do not have to fire people again.

    Big variety of reasons offered.

    More important, though, is that Obama's statement implies companies are sitting on a full $2 trillion that could be immediately invested in business expansion. And that's not right.

    "Much of this money is already committed -- it must be used to pay wages, suppliers, rent, utilities, etc.," said Dean Baker, co-director of the liberal Center for Economic and Policy Research. "But, there is little doubt that companies have a great deal of cash sitting around that they could use to invest, if they wanted, even if $2 trillion is more than a bit of an exaggeration."

    It's crucial, said Brian Bethune, an economist at IHS Global Insight, to "normalize" the figure. In other words, how much in liquid assets did businesses have on hand back when things were going relatively well?

    In the category Obama cited, liquid assets came to about $1.5 trillion in 2005 and 2006. That's a good indicator of normal levels, Bethune said.
    Dude, seriously, WHAT handkerchief?

    snooggums' density principal: "The more dense a population, the more dense a population."

    Iliana: "You're a great friend but if we're ever chased by zombies I'm tripping you."



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