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Posted at 10:28 AM ET, 12/21/2010

Tom Toles is worth a thousand words

By Ezra Klein


By Ezra Klein  | December 21, 2010; 10:28 AM ET
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Well, the corporate world and Chamber of Commerce are getting some Obama love and attention, so maybe now they've been placated and will start hiring.

Unless they are playing the long game (unlikely) and will keep hiring depressed until they get a FreedomWorks / Koch sponsored Repub president in 2012.

Posted by: kromerm | December 21, 2010 10:34 AM | Report abuse

How many people did Toles or Klein hire today?

Posted by: msoja | December 21, 2010 10:45 AM | Report abuse

How many times does it need to be said?

Corporate "cash" does not equal huge piles of paper dollar sitting in a vault.

"Now, as then, analysts are pointing to an apparent pile of corporate "cash on the sidelines" as if these holdings of debt securities somehow make new corporate spending more likely. In order to evaluate this argument, it's necessary to understand that what is being called cash is actually a stack of IOUs for money that has generally already been spent by other companies or by the government.

Don't get me wrong. At an individual company level, it's obvious that if DuPont has a bunch of marketable securities on its balance sheet, it is free to sell those securities and spend the money on new equipment and so forth. The issue is that somebody else has to buy those securities. At the end of the day, there is no less "cash on the sidelines" after that change of ownership than there was before.

Put simply, there is a lot of apparent "cash on the sidelines" because the government and many corporations have issued enormous quantities of new debt, often with short maturities, while other corporations have purchased it. It is an equilibrium. The assets that are held in the right hand represent debt that is owed by the left. You cannot call that pile of short-term marketable securities an asset without calling it a liability. The cash on the sidelines is evidence of debt incurred to fund economic activity that is already in the past. It will remain "on the sidelines" until the debt is retired. The government debt has been issued to finance deficit spending. At the same time, a great deal of corporate debt has been issued over the past year apparently as a pre-emptive measure against the possibility of the capital markets freezing up again."

Posted by: justin84 | December 21, 2010 10:46 AM | Report abuse

coordination FAIL

Posted by: bdballard | December 21, 2010 11:22 AM | Report abuse

Several trillion corporate dollars are sitting in banks,

Profits statements are up--not because cash is digital, but because they are sending digital cash to employees they've long since downsized or refused to hire.

BTW, my cash is digital too. But I can convert it to hard cold cash anytime I want to, just like the corps.

Posted by: lauren2010 | December 21, 2010 12:03 PM | Report abuse

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