Cheap Debt for Corporations Fails to Spur Economy

[futurebeachbum]

From the NYT Article "Cheap Debt for Corporations Fails to Spur Economy"

Turns out banks aren't the only entities borrowing ultra cheap money and then just sitting on it. It shows the unintended consequences of interest free money from the Fed. Banks borrow it and buy TBills. Low/no prime rate drives down all rates so that corporate bonds can have very low yields as well and still sell

From the article:

Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.

The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up ? but the economy is unlikely to perk up if corporations keep saving.
...
Corporations now sit atop a combined $1.6 trillion of cash, a figure equal to slightly more than 6 percent of their total assets. In the first quarter of this year it was 6.2 percent of assets, the highest level since 1964, when it was 6.4 percent.

When will they start spending that money ? in particular, by hiring?

That is part of what has become the great question of this long, jobless recovery: When will corporate America start to feel confident enough to put its cash to work, building factories and putting some of the nation?s 14.9 million unemployed to work?

I expect most of them are waiting to see how things go in November and how bad the second dip will be.