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That follows from the widespread private sector insolvency. They're holding cash to meet margin calls and because there's no productive use for that cash when there is no demand for product.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Sep 28th, 2012 at 11:25:31 AM EST
[ Parent ]
Well in that case, since no one wants to print money in the Buba, wouldn't it be better if the government got that cash instead of it sitting in the hands of those segments of the private sector who have it?

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Fri Sep 28th, 2012 at 11:36:36 AM EST
[ Parent ]
Only if we trust said government to spend it?
by Metatone (metatone [a|t] gmail (dot) com) on Fri Sep 28th, 2012 at 12:20:03 PM EST
[ Parent ]
That depends on which sorts of firms have it, and the term structure of their liabilities.

It is entirely conceivable, in a situation such as the present, that a firm we would like to keep existing would hold cash or cash-equivalent assets to meet future payments due. Because they can neither be certain that they can roll over their liability, nor that any non-cash asset will be not-toilet-paper by the time they need to make payment.

Basically, it only makes sense to take the cash away if there are no short- or medium-term liabilities that the cash will be needed to meet, or if you can guarantee that those liabilities will be rolled over (which you can't, because the BuBa has its thumb up its ass).

Or if you think the company in question should be taken out back and shot on general principles. Which is, of course, the case for some companies.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Sep 28th, 2012 at 02:33:32 PM EST
[ Parent ]

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