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Call me crazy, but I like to know who is screwing me. What about you?

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The Wikileaks State Department cables are notable for their refreshing lack of ideological baggage.  

These communiques are sober assessments made by professionals for professionals who need to take action.   I find it encouraging to see they reached similar conclusions as I did when they looked at the same open source information.  Where we part company is the action they took based on that information was  often very different from the action I would have taken.

For me, the take home message in all this is Sir Francis Bacon was wrong.  

Knowledge is not power.  Action is power.  However, action without knowledge is asking for trouble.  With that in mind, I offer up a very interesting data set that demonstrates how badly we are getting screwed.  It also leads to the ineluctible conclusion that expecting politicians to help us is a fool's errand.  

 

I direct your attention to the attached figure.  

The figure running down the page shows the 50 largest American corporations (based on market capitalization).  The green bars show the cash on hand.  The red bars show the debt.  The companies are sorted based on the amount of cash they have on hand, in descending order.

Scroll down the page and you will see virtually all of the names are ones you recognize.  That makes sense.  These are huge corporations that dominate the global economy.  That's why they are household names.  

Added together, these companies hold about $3.7 TRILLION dollars in cash.  That is a little more than the entire United States government spent last year.  In other words, these 50 companies have enough cash to do everything the federal government did last year, and still have $500 Billion left over.  That includes fighting two wars.

 

What is striking about these global leaders is that even within these rarified circles, almost all the cash is highly concentrated into very few hands, and those hands all belong to investment bankers.  

Goldman Sachs has close to $800 billion.  
JP Morgan has more than $760 billion.  
Citi has about $730 billion.
Bank of America has a hair over $700 billion,
with "a hair" being equal to $100 million.

THAT IS ALL CASH.

Together, these four investment banks have about $2.986 Trillion IN CASH.  That is 80% of all the cash held by the 50 largest corporations in America.

Now it is true, some of these firms hold massive debt.  JP Morgan and Bank of America each hold over $800 Billion in debt.  BofA holds almost $900 billion in debt.  But when you compare their debt/cash ratios they are doing a hell of a lot better than GE, Ford, Verizon, ATT or WalMart.

Mike Shedlock provides this interactive graphic on his website (courtesy of Ellie Fields and Ross Perez of Tableau Software).  He uses this graphic to dispute the claim being made in the popular press that there is a lot of cash "sitting on the sidelines" and ready to enter the economy.  He argues that is not the case once you take into account the amount of debt these companies are carrying.

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For starters, I am not the Henry Porter who writes for the Observer in Britain. I'm a native New Yorker living in Maryland. I used to believe knowledge was power. Now I know knowledge translated into action is power.

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