The latest Bloomberg Business Week offers more evidence of the economic uncertainty that?s been holding back America?s economic recovery:
It isn’t just hedgies who are frozen in the headlights. American households are sitting on nearly $8 trillion in cash?money that’s earning virtually no return because people are so wary of additional losses. U.S. corporations are hoarding at a record pace as well. According to Moody’s Investors Service, cash at U.S. nonfinancial corporations stood at $1.84 trillion in the first quarter of this year?a 27 percent increase from early 2007. As a percentage of total company assets, cash is at its highest level in half a century.
The situation reminds me of Amity Shlaes? description of the negative impact of Franklin Roosevelt?s New Deal economic policies.
