Many big companies, such as Microsoft have been issuing bonds at really low rates, but aren't spending the money on new factories, equipment, or other various expenses, instead they are stockpiling the money until the economy improves. This brings up a big problem because companies are saving money waiting for the economy to improve, however it is necessary for these corporations to spend money in order to lift the economy. The federal reserve has held interest rates at nearly zero for two years which allows companies to sell the bonds at rates even below one percent. This allows companies to invest and create jobs, however they are not doing so.
Corporations now sit on a combined 1.6 trillion dollars in cash. Companies are worried about the economy tumbling down into another recession, and therefore are holding on to their investments. Although this might be the most rational move for a company, it is not the best move when it comes to pushing the economy forward.
http://www.nytimes.com/2010/10/04/business/04borrow.html?pagewanted=2&hp
Tom Millman
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