CEO says he lacks confidence things are being done right in Washington
By STEVEN MUFSON

In the summer of 2008, steel giant Nucor decided to raise some cash. It issued new shares of stock and floated some corporate bonds. As financial markets crumbled, the company ignored pleas from some investors and analysts that it buy back shares, which are now selling for about half their peak.

Today, as a result, Nucor has a $2.2 billion cash hoard — and one year into the great recession, its CEO Daniel DiMicco is sitting on it.

“Everything is still on hold because we don't have a lot of confidence that the right things are being done in Washington to reinvigorate the economy,” said DiMicco. “We're keeping our powder dry.”

Nucor isn't alone. The balance sheets of large U.S. corporations are for the most part in good shape. Many big companies have piles of cash on hand and credit markets have thawed so that they can raise new funds. Between Jan. 1 and Nov. 2, U.S. corporations overall raised $740.8 billion by issuing bonds, up from the $522.2 billion raised during the same period last year and almost as much as the $779.8 billion raised in the go-go year of 2007.

But most U.S. executives lack enough confidence in the economy to expand their businesses. And as long as consumer spending is lagging too, that leaves the federal government straining to stimulate a recovery that is still struggling to gain speed.

“Cash is high. Interest coverage ratios are low. And big businesses are able to issue bonds pretty cheaply,” said Mark Zandi, chief economist of Moody's Economy.com. “The concern is that they're not using those balance sheets, that they're not out investing or hiring. And until they do, the economy is not going to engage, and there is always the risk that we're going to fall back into recession.”

Financial firms have been among the leaders in raising money. Citigroup has nearly doubled its cash reserves to $244.4 billion. But top technology companies are flush too. Microsoft has $36.7 billion of cash and Google has $22 billion.

Executives have different reasons for their reticence. DiMicco is jittery about the future. From his vantage point, he said, companies have recently been restocking the supplies they normally have on hand but final sales are still languishing. “Whatever positive uptick there has been to this point has been an inventory correction, not a real improvement in demand,” he said.

Other executives are still recovering from last year's scare when capital markets completely seized up and many companies were unable to borrow money at any price, threatening the ability to finance day-to-day operations.

Some companies are sitting on cash because their war chests are overseas, and bringing money back to invest in the United States would mean paying substantial taxes.

http://www.chron.com/disp/story.mpl/business/6710333.html

"Citigroup has nearly doubled its cash reserves to $244.4 billion."


Hmmmmmmm, ok, so how does one explain their bankruptcy announcement last week?

LOL.

Don't confuse CIT with CITI :D