Quote:
Originally Posted by Exhibitman
Separate the 'must' from the 'can'. The cost of capital is an externality. The need for capital is highly variable across industries and businesses. Many of the large multinational tech companies are hoarding cash overseas and opting for financing here to evade US taxes:
https://fortune.com/2022/08/05/us-co...ax-incentives/
Those companies do not 'need' capital, they use it as a tool when it is cheaper than paying their taxes. There are many businesses and industries that exploit situations like interest rate hikes and recessions or fears of recessions to justify wage freezes, wage reductions, firings and so forth. They shift from capital to those tools when capital costs rise. |
And yet, they're engaging in hiring freezes and/or laying people off. It may not be driven by rates, at least not directly, but they're clearly getting ready for deteriorating economic conditions.