Even if we could get this economy growing again, how much can corporations really spend when they are, just like the average consumer, tied down with too much debt?
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New York, NY (PRWEB) February 27, 2012
Corporate debt has been in a steady climb since 1978 and the total number continues to rise to a record at over $7.6 trillion, according to a recent article by Michael Lombardi, lead contributor to Profit Confidential (see Warning: Corporate Debt-to-Cash Reaches Record High).
“Corporations have been hesitant to spend their corporate profits because of visibility,” says Lombardi. “They simply don’t see where the demand for their product/service is going to come from in the future.”
Lombardi says that this number is much worse when you take out Apple Inc. As of the end of 2011, Apple had $97.6 billion in cash from corporate profits, with no corporate debt.
“If we remove Apple’s cash from non-financial corporations’ cash-on-hand, we get $1.9 trillion, and since Apple has no corporate debt, the debt figure remains at $7.6 trillion,” says Lombardi. “This means that corporations are sitting on four times more debt than cash-on-hand: $4.00 of corporate debt for every $1.00 of cash earned from corporate profits.”
Lombardi believes that corporations remain cautious and have opted to spend their corporate profits on share buybacks and dividends instead.
“Even if we could get this economy growing again, how much can corporations really spend when they are, just like the average consumer, tied down with too much debt?” asks Lombardi.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.