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When Romney becomes President.......
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<blockquote data-quote="Ricochet1a" data-source="post: 1003593" data-attributes="member: 22880"><p>I'll throw my two cents in here...</p><p></p><p>Right now, U.S. businesses are sitting on $2 TRILLION in cash. That's $2 TRILLION that isn't invested, it is just sitting in cash in various banks across the world. Apple is sitting on about $120 BILLION in cash right now (two-thirds of that overseas), and is trying to figure out what to do with that cash. Apple is adding about $1 BILLION a WEEK to that cash holding. To put Apple's cash reserve into perspective, FedEx Corporation is only worth about $30 BILLION. Apple could purchase FedEx Corporation almost 4 times over with just its cash on hand. </p><p></p><p>This explains why inflation hasn't shown itself after all the "quantative easing" (printing money) that has gone on in the past 3 years (there is $2 TRILLION in unspent cash out there). For those that are interested, this is a form of what is known as the "liquidity trap". However, once these businesses start to spend that cash... watch out for inflation to hit hard and fast...</p><p></p><p>Something is going one here....</p><p></p><p>Here's what it is...</p><p></p><p>A very significant amount of that cash which companies have in their bank accounts is sitting overseas. If they choose to bring that cash back into the US, they would instantly be taxed on that - those companies don't want that. They are all waiting for Romney to get elected and some form of moratorium to be enacted on taxing profits earned overseas, enabling profits to be brought back into the US at a presumably lower rate than currently exists.</p><p></p><p>Put another way, business is waiting for Obama to be ousted before they'll start taking risks again. This isn't opinion, it is merely an analysis of how businesses are spending their profits - they're NOT right now, they're sitting on the cash. </p><p></p><p> In addition, businesses are holding back any expansion plans, since they see the costs associated with "Obamacare" and just cringe at taking in additional employees (paying for benefits when prior to the healthcare legislation, this expense didn't exist). The businesses which traditionally DIDN'T offer any sort of benefits for their part-time employees are most affected by this.</p><p></p><p>The US Federal Government (and the other G 8 governments) have done just about all they can do to stimulate the economy. Now, it is open to arguement whether all that stimulus prevented an even worse situation from developing (2nd Great Depression), or whether the stimulus ($5 TRILLION worth in the US), was merely flushed down the toilet. I personally it is somewhere between those two extremes. </p><p></p><p><u>Put simply, nothing is going to happen as long as the status quo is maintained</u>. If Romney is elected, then businesses will then wait for some sign that they'll get some sort of break on repatriating profits earned overseas, or for some sign that the healthcare legislation will be repealed or waterdowned. Once this happens, business will figure that "there isn't a better time to start investing all of that cash on hand" - and the economy will start to really turn around. It won't be that Romney will wave some magic wand, it will be a matter of <u>perception among those who have cash on hand</u>, that the time to wait to invest will have passed, and the time to start trying to grow again will be at hand. It will be much more an exercise in psychology than anything substantive that Romney would do. </p><p></p><p>When it comes to investing, perception is oftentimes more important that what a short term analysis would indicate. If investors are worried that they'll be taxed at a higher rate (making their investment more risky), they'll tend to sit on their cash (or start purchasing hard commodities if there is a risk of inflation), and wait for a political climate that is more "favorable". That more "favorable" political climate would mean that Obama is ousted and replaced with someone more sympathetic to business. </p><p></p><p>Personally, I'm into hard commodites right now and am staying out of the stock market - just too damn much volatility and no clear sign of an upward direction. Magnify this by a few million times - and it is easy to see why the economy is stuck in the mud. The economy only grows when investment is made in generating NEW business - NOT into buying things to hedge against inflation and uncertainty. </p><p></p><p>Part of what is driving this "liquidity trap", is tax policy - pure and simple. Countries around the world are competing against each other in trying to offer the best incentives to businesses to locate and do their "business" there. The primary way they do this is by offering a low tax rate - but just high enough to bring in enough revenue. The US will have one of the highest tax rates on business in the world come 2013 - this isn't helping. One can argue till they are blue in the face about "fairness" - in the end, business goes to where its overall operating cost (including tax liability) is lowest. </p><p></p><p>I could keep on going here, but unless one really wants an additional 4 years of what has already gone on for the past few years - then Obama has to go. It's not a matter of voting FOR the candidate that one "likes", it a matter of "voting for the least damaging of two bad choices". South Park had an episode in which they parodied the election of 2008 (I think that was it), where they illustrated the choices the students had were between a "turd sandwich" and a "<img src="/community/styles/default/xenforo/smilies/group1/censored2.gif" class="smilie" loading="lazy" alt=":censored2:" title="Censored2 :censored2:" data-shortname=":censored2:" />" (as candidates). That pretty much sums it up right now. The real choice is trying to figure out which one will do the least amount of damage - and potentially get people to start spending again.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 1003593, member: 22880"] I'll throw my two cents in here... Right now, U.S. businesses are sitting on $2 TRILLION in cash. That's $2 TRILLION that isn't invested, it is just sitting in cash in various banks across the world. Apple is sitting on about $120 BILLION in cash right now (two-thirds of that overseas), and is trying to figure out what to do with that cash. Apple is adding about $1 BILLION a WEEK to that cash holding. To put Apple's cash reserve into perspective, FedEx Corporation is only worth about $30 BILLION. Apple could purchase FedEx Corporation almost 4 times over with just its cash on hand. This explains why inflation hasn't shown itself after all the "quantative easing" (printing money) that has gone on in the past 3 years (there is $2 TRILLION in unspent cash out there). For those that are interested, this is a form of what is known as the "liquidity trap". However, once these businesses start to spend that cash... watch out for inflation to hit hard and fast... Something is going one here.... Here's what it is... A very significant amount of that cash which companies have in their bank accounts is sitting overseas. If they choose to bring that cash back into the US, they would instantly be taxed on that - those companies don't want that. They are all waiting for Romney to get elected and some form of moratorium to be enacted on taxing profits earned overseas, enabling profits to be brought back into the US at a presumably lower rate than currently exists. Put another way, business is waiting for Obama to be ousted before they'll start taking risks again. This isn't opinion, it is merely an analysis of how businesses are spending their profits - they're NOT right now, they're sitting on the cash. In addition, businesses are holding back any expansion plans, since they see the costs associated with "Obamacare" and just cringe at taking in additional employees (paying for benefits when prior to the healthcare legislation, this expense didn't exist). The businesses which traditionally DIDN'T offer any sort of benefits for their part-time employees are most affected by this. The US Federal Government (and the other G 8 governments) have done just about all they can do to stimulate the economy. Now, it is open to arguement whether all that stimulus prevented an even worse situation from developing (2nd Great Depression), or whether the stimulus ($5 TRILLION worth in the US), was merely flushed down the toilet. I personally it is somewhere between those two extremes. [U]Put simply, nothing is going to happen as long as the status quo is maintained[/U]. If Romney is elected, then businesses will then wait for some sign that they'll get some sort of break on repatriating profits earned overseas, or for some sign that the healthcare legislation will be repealed or waterdowned. Once this happens, business will figure that "there isn't a better time to start investing all of that cash on hand" - and the economy will start to really turn around. It won't be that Romney will wave some magic wand, it will be a matter of [U]perception among those who have cash on hand[/U], that the time to wait to invest will have passed, and the time to start trying to grow again will be at hand. It will be much more an exercise in psychology than anything substantive that Romney would do. When it comes to investing, perception is oftentimes more important that what a short term analysis would indicate. If investors are worried that they'll be taxed at a higher rate (making their investment more risky), they'll tend to sit on their cash (or start purchasing hard commodities if there is a risk of inflation), and wait for a political climate that is more "favorable". That more "favorable" political climate would mean that Obama is ousted and replaced with someone more sympathetic to business. Personally, I'm into hard commodites right now and am staying out of the stock market - just too damn much volatility and no clear sign of an upward direction. Magnify this by a few million times - and it is easy to see why the economy is stuck in the mud. The economy only grows when investment is made in generating NEW business - NOT into buying things to hedge against inflation and uncertainty. Part of what is driving this "liquidity trap", is tax policy - pure and simple. Countries around the world are competing against each other in trying to offer the best incentives to businesses to locate and do their "business" there. The primary way they do this is by offering a low tax rate - but just high enough to bring in enough revenue. The US will have one of the highest tax rates on business in the world come 2013 - this isn't helping. One can argue till they are blue in the face about "fairness" - in the end, business goes to where its overall operating cost (including tax liability) is lowest. I could keep on going here, but unless one really wants an additional 4 years of what has already gone on for the past few years - then Obama has to go. It's not a matter of voting FOR the candidate that one "likes", it a matter of "voting for the least damaging of two bad choices". South Park had an episode in which they parodied the election of 2008 (I think that was it), where they illustrated the choices the students had were between a "turd sandwich" and a ":censored:" (as candidates). That pretty much sums it up right now. The real choice is trying to figure out which one will do the least amount of damage - and potentially get people to start spending again. [/QUOTE]
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