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Banks to Companies: No More Deposits, Please:
U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it.
When the coronavirus pandemic hit last year, corporate executives rushed to raise money. Banks have been holding that cash ever since, and because companies are reluctant to borrow from them, they can’t turn it into income-generating loans. That has weighed on banks’ profit margins, and some have started pushing corporate customers to spend the cash on their businesses or move it elsewhere.
Bankers say they thought the improving economy would reduce companies’ desire for holding cash, but deposit inflows have continued in recent weeks. Chief financial officers and treasurers, many still wary of the pandemic’s impact, say they aren’t ready for big changes, even if they earn little or nothing on their deposits.
[...] Top of mind for many big banks is a rule requiring them to hold capital equivalent to at least 3% of all assets. Worried about the rule’s impact during the pandemic, the Fed changed the calculation in 2020 to ignore deposits the banks held at the central bank, but ended that break this March. Since then, some banks have warned the growing deposits could force them to raise more capital, or say no to deposits.
(Score: 1) by khallow on Friday June 18 2021, @03:19AM (2 children)
The economy does a hell of a lot more than that. A couple of big ones are human longevity and improving our own abilities.
This happens all the time. Giant companies are notorious for being unable to find and deliver new and valuable goods and services. Small businesses explore the many profitable avenues the giants ignore.
Sounds like Oz is forced to be smarter than you (probably because they need the resources from those additional workers to provide the services they've committed to). This is far from the first time that someone has come up with a relatively sensible list of problems and then proposed a solution that requires turning their back completely on the problems they just acknowledged. Deliberately shrinking the labor market won't identify under-filled needs nor create more small and medium sized businesses. Instead, it destroys resources like labor that would otherwise be applied to such problems.
It's a problem creator, not a problem solver.
(Score: 3, Interesting) by deimtee on Friday June 18 2021, @05:21AM (1 child)
Which changes the actual point of that paragraph by about 0.4 iotas.
Except the giants aren't ignoring them anymore. Set up almost any innovative new small business and some large company will crush it.
The labour market is currently over-supplied. This is evidenced by the difficulty young people have in entering it. Raising the retirement age is like eating your seedcorn. By the time those geriatrics are finally knocked off by COVID 2040 or something society is going to hit a wall where no-one knows how to do the jobs. 30 year-olds on unemployment for 10 years are not ideal trainees and no trainers will be around anyway. Early retirement forces the companies to train the next generation now.
Yes we should be massively investing in life-extension, medical research, space, all that stuff. Now what percentage of people do you think can realistically contribute to that sort of endeavor? I would say less than 1% of people have the capability to undertake research at that level.
If you cough while drinking cheap red wine it really cleans out your sinuses.
(Score: 1) by khallow on Friday June 18 2021, @07:42AM
The claim that giants aren't ignoring the small fry and "crushing" them is bunk. For example, one such phenomena is for small companies to cut in on large companies' business merely by replicating what made the large company successful in the first place. This happens a lot in the retail, grocery, and restaurant sectors, for example. The big company gets sloppy and often a small company just inserts itself, often using the same tricks that the big company once used.
Second, my point about your paragraph, which you complete miss, is that there is huge room for the economy to improve our lives. Sure, there's only so much food you can eat - we can only go so far there. But there's a lot more life you could be living. There's a lot more knowledge you could be learning. Places you could go. Etc. Treating those far more open-ended needs/wants the same as food and shelter is profoundly ignorant.
Third, let's look at this paragraph:
As I already noted, there's a number of countries that don't have trouble with over-supplied labor markets. They don't need to do any of the above. It's time to look at what works.
What I find particularly remarkable is your lack of interest in finding solutions that don't blatant cause the problems you're complaining about. For example, if we reduce human participation in labor (which is what your previous suggestions about early retirement and shortening the work week would do), then 30 year olds who haven't seen work aren't going to be your biggest problems. A huge pile of people who aren't doing anything will be your biggest problem.
Further, you complain about lack of experience among workers while proposing policies - like getting rid of the most experienced workers - that will just make it worse. At least propose something that makes things better.
It's throwing away the seed corn to throw away good workers because of some ridiculous ideological goal. Get more employers - not throw more workers out.
A lot more than 1%. Research doesn't happen in a vacuum nor is it the largest part of investing in "all that stuff". You need a lot of infrastructure, support staff, and implementation staff. For example, suppose your "less than 1%" researcher comes up with an idea for extending life span by 10 years. Well, how do you know it'd work? It needs to be tested. More than 1% of the population can do serious work there. Then when such treatments work, you need to apply them to people. That requires more staff, again more than 1%. All those people need low skill work done, like empty trashcans, moving packages, greeting people, and such. And of course, now that you have a large group of wealthier people working in this industry, they need stuff from the general market - landscaping, childcare, auto and housework, etc.
The ignorance here is remarkable. There is a simple answer to this supply and demand problem - increase the demand for workers. It's worked for centuries, far longer than any of us have been alive. We should wonder why you're deliberately choosing the more painful and harmful route rather than the obvious route. But this would require us to actually throw some bennies to the people who actually hire rather than the rest who don't.
My take is that ultimately this is yet another lobbying effort for a lifestyle. As a near libertarian, I have no trouble with you living however you like (bar the usual imposition on other peoples' rights), but I see no reason we should structure society to accommodate your desired lifestyle. Figure out how to fund it yourself. Don't cripple your society for your own selfish interests.