Corporations with lots of cash and doing little spending Essay - 1

Corporations with lots of cash and doing little spending - Essay Example With companies lying about their true financial positions with series of financial scandals that followed after another, you cannot blame people if they distrust the financial infrastructure in this country. It will take time to regain that confidence. So it is not a wonder if companies and investors alike are very cautious in investing here in the United States. China on the other hand, does not have that problem. Their economy has been registering more than 10 % in GDP for more than 15 years with its financial market always on a steady rise. We also have to remember that China is an emerging market that came from decades of isolationist communist rule. That means that its market is relatively unexplored compared to the maturing market in the United States and Europe. In addition, a quarter of the world’s population is in China so we can only imagine how big the market is and along with it is the profit potential for business who will corner a share of that market. So if a certain economy or company has that much money lying around and has to reinvest, that money will naturally look for a market that yields higher return with relatively lower risk. It will not be a surprise if all roads for investors will lead to China given the potential of its market. Do not forget that our credit rating has also been just recently downgraded and t hat is not an incentive for investors to keep their money here. The case of San Francisco-Oakland Bay Bridge construction’s outsourcing of its massive cable, key sections of the iconic tower and deck to China that could amount to $400 million dollars may look unpopular and insensitive with a 12 % domestic unemployment, but it makes economic sense and sound fiscal policy for the State of California. It is more cost-efficient to have it sourced abroad than have it done domestically. Bob LaVenture, a District Director for the United Steelworkers Union admitted it himself that there is no way