Originally Posted by Taco John
It's really simple. Businesses have cut all the fat they possibly could. Doing this has streamlined their businesses and made their margins really good. Now the question is about reinvesting - how do you keep the good margins while re-investing and growing your business. Like it or not, businesses do not feel good about reinvesting under an Obama administration. The perception, whether you agree or not, is that it is much higher risk because of the amount of overhead that is involved now with such things as Obamacare. So, instead, businesses are prioritizing on how to deal with the new regulations BEFORE they reinvest. This means finding out where they can cut more, and find new efficiencies. We're probably looking at a two year cycle here as they adjust. After that two year cycle, I think we'll start to see some businesses have built up enough comfort in the new environment to start to hire again. I don't think it will be gang busters, by any stretch. It'll be a trickle. There's not a lot of room for error when you have regulations like Obamacare sitting on your margins. The comeback will be cautious.
You are oversimplifying. Big time.
This isn't hard to understand. Executives are hoarding cash. They're cutting back workers, scaling back costs, NOT re-investing back into the company, yet are themselves making much more money.
When executive compensation goes up, that cuts back their margins.
Yes, I agree with curbing regulation and I don't agree with Obamacare. But let's stop using that as an excuse. If corporations were truly worried about cutting back costs, they'd not only cut back on their company, but at least keep executive compensation flat.