Cash held by S&P 500 companies, excluding financial firms, is now 10% of assets--double the level just five years ago and the highest it's been for at least 20 years. At the same time, capital expenditures are anemic. Some of this loot, of course, can go toward paying down debt. But net debt is already at less than 60% of shareholder equity--a 16-year low.
Something like 40% of the S&P parket cap is financial stocks now so perhaps we are comparing apples to banannas or something like that.
Debt is only 60% of equity now. Gee, what happens if stocks prices fall by 1/3 or 1/2.
Finally, just what do they want companies to do with that cash?
The smart ones will raise dividends. The stupid ones will try and buy out other companies at exhorbitant prices (just like 2000 I might add), or invest in more stores that are not needed. The crooked ones (and there wil be a lot of those) will issue a zillion stock options to themselves.
Seriously what does anyone want them to do with it?
Build more walmarts, McDonalds, Wendies, INTC make more chips, banks loan more money to Argentina, GM expand production? Perhaps they could pay their employees more. Nah. Employeees, who needs them?
forbes.com
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