Here's your afternoon bucket of despair:
Despite having an unprecedented amount of cash on hand with which to create jobs -- more than $3 trillion, nearly four times as much as the 2009 stimulus bill -- the corporations aren't spending and the banks aren't lending.
"They've been making money, and they haven't been spending it. So it sits there," said Jared Bernstein, a former economic adviser to President Barack Obama now at the non-partisan Center on Budget and Policy Priorities. "The economy has been growing since the second half of 2009, and the vast majority of households have seen very little of that. It's got to be going somewhere."
[...] The latest report from the Federal Reserve shows that big banks' cash reserves peaked in the third quarter of 2011, but are still near their all-time high at just under $1.6 trillion -- an astonishing 80 times the $20 billion they held in reserve in 2007.
I'm no big-city economist, but wouldn't spending money help the economy—
A recent study by Pollin's institute found that if America's largest banks and non-financial companies moved just some of that cash into productive investments instead, that would give the economy a huge boost, creating about 19 million jobs in the next three years and lowering the unemployment rate to under 5 percent.
—thanks!—wouldn't spending money stimulate the economy by creating more demand, which in turn would spur spending, which would combine into growth? In other words, what sense does this make:
"If you're looking to invest right now, you'd be looking at a consumer base that's super-strapped," said Heather Boushey, senior economist with the Center for American Progress, a pro-Democrat think tank.
[...] "Companies invest where they see a return and they haven't seen much of a return in investments here because we've never really escaped the grip of the Great Recession," said Bernstein. "If you look at where they're profitable, it's in economies that are growing more quickly than ours," he said. "We're growing, but we're growing too slowly."
a) What patriotism! b) Do corporations understand that they are part of—an extremely large part of—the economy? The economy is not some external, autonomous beast with which they do business; companies can't sit back and wait for it grow faster, because not spending money is one of the prime brakes upon that growth. They are enabling the very conditions that say are restraining them.
Corporations no doubt understand this, just as they understand the relation between the state of the economy and the reelection of an incumbent. The worse the economy, the better the chances for Romney; Obama's hardly been the enemy Wall Street claims, but a Romney in the White House still means lower taxes and fewer regulations. That, not economic certainty and not economic growth, is what corporations are after. If the economy remains stagnant, and millions unemployed, and local, state and federal budgets strapped, and education and social services cut, until corporations get the tax and regulatory codes cut to their fittings, so be it.
This does, however, raise the question: If corporations have been crossing their fingers behind their back, waiting for a fiscal conservative to take the federal reigns, what happens if Obama is reelected? If Obama wins another four years, especially if the Democrats hold on to the Senate, austerity will remain a policy of opposition, and one people will most likely be tired of (if they aren't already). Will businesses have any incentive or willpower to wait another four years for another shot at a conservative in the White House?
If they don't, and if spending and hiring magically increase upon Obama's reelection, won't that show that corporations could have acted all along? And while Obama will be too happy to have been handed a successful second term to question the hand reluctantly feeding him, won't the rest of us have all the cause in the world to push for greater regulation against the entities that not only precipitated the financial collapse but extended and exacerbated it?
Long story short: if corporations want a growing economy and fewer regulations, isn't it in their interest to act now, regardless of the election?
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