Corporate Treasurers Continue To Hoard

via Dollars & Sense:



Corporate Treasurers Continue To Hoard
by Dollars and Sense


Fearing another credit crunch. From Bloomberg:


Treasurer Fear of Credit Freeze Seen in Cash Hoarding Update 2
By Bryan Keogh and John Detrixhe

Aug. 10 (Bloomberg) Two years after credit markets seized up and caused the worst financial crisis since the Great Depression, companies are hoarding the most cash in at least a decade.

"Every action we take or contemplate taking is measured by its impact on our balance sheet and liquidity," Mark Jacobs, the chief executive officer of Houston-based RRI Energy Inc., told analysts and investors on Aug. 3. The company sold its Texas retail electricity business and the Reliant brand name in May, helping triple cash and equivalents from a year earlier to 18 percent of assets, according to data compiled by Bloomberg.

Even as government reports show that the first global recession since World War II may be easing, corporate treasurers are raising cash as fast as they can, wary of losing access to capital. Corporate defaults reached 10.7 percent worldwide in July, the highest since 1991, according to Moody's Investors Service. Credit markets that started to freeze in August 2007, have now triggered more than $1.5 trillion in writedowns and losses at the world's biggest financial institutions.

Cash and short-term investments accounted for about $1.98 trillion, or 8.2 percent, of assets at the end of the second quarter for companies in the Standard & Poor’s 500 index, up from about $1.6 trillion, or 6.4 percent, a year earlier, Bloomberg data show. Cash reached a record $2 trillion in the first quarter, 8.3 percent of assets. ..........(more)

The complete piece is at: http://www.dollarsandsense.org/blog/2009/08/corporate-treasurers-continue-to-hoard.html

and wages/hours/benefits continue to be cut for those who do still have jobs :(