From today's NY Times a sign that perhaps for corporations and individuals that even caution, restraint, and endless 'waiting for more clarity before we do anything with our money', may also be losing effectiveness as a strategy or hedge against tough economic conditions:
The article titled: In Cautious Times, Banks Flooded With Cash, describes the plight of some bankers large and small from across the country that faced with shrinking interest rate spreads, (which reduce profits), general reduction in demand for loans and loan products, and a public increasingly seeking 'safe' havens for cash stores, have collected too much cash in the form of deposits, and are even beginning to refuse or discourage customers from giving them more.
From the Times piece:
Bankers have an odd-sounding problem these days: they are awash in cash.
Droves of consumers and businesses unnerved by the lurching markets have been taking their money out of risky investments and socking it away in bank accounts, where it does little to stimulate the economy.
Though financial institutions are not yet turning away customers at the door, they are trying to discourage some depositors from parking that cash with them. With fewer attractive lending and investment options for that money, it is harder for the banks to turn it around for a healthy profit.
So the banks, at least some of them as indicated in the Times piece, can't really make a meaningful profit with all the excess cash and deposits that have come in. While the piece doesn't really try to make us sympathetic towards the bankers and the banking industry, (good luck with that), it does at least seem to indicate that for a few banks anyway, they'd rather play by the rules and at least try to steer some deposits to more productive ends compared to pretty much driven down to zero return traditional deposit accounts.
While the safe havens for cash may not have stopped being safe, at least some of them have become unavailable due to overcrowding.
The giant cash reserves that many US organizations are sitting on have been well-reported in the last year or so, but this is the first time that I've noticed reports that even the 'sit on all our cash until times get better' strategy might have some practical problems actually being executed.
If the local bank doesn't want your cash, then maybe just maybe, it's time to think of some more creative ways to use those 'unwanted' funds.
It's pretty likely at least one employee out there has a great idea for a new product, improved service, enhanced process - something that could use a little seed money to explore further.
I'll bet you have lots of loyal, solid performing employees that have not seen a raise or bonus of any kind in several years, they might find something to do with a few extra dollars around this holiday season.
And chances are about 100% if you have a job opening at your company you have no shortage of applicants. Hire the one with the best attitude and spend the money to train them how to do the job, rather than waiting for the 'perfect' candidate to walk in.
The easiest money to spend is other people's money, I get that. But when even the bank won't take your money, it seems to me like their are lots of organizations that could use this advice.
Is your organization sitting on a pile of cash? What needs to happen to stop hoarding and start investing?