The Crock of Corporate Cash

Marketwatch (via Ritholtz):

You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they've paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.
You could hear this great news pretty much anywhere — maybe from Bloomberg, which this spring hailed the "surprising strength" of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies "have accumulated an astonishing $1.8 trillion of cash," leaving them in the best shape, by some measures, "in almost half a century."
Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were "hoarding cash" but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?
It all sounds wonderful for investors and the U.S. economy. There's just one problem: It's a crock.
American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.
You'd think someone might have noticed something amiss. After all, we were simultaneously being told that companies (a) had more money than they know what to do with; (b) had even more money coming in due to a surge in profits; yet (c) they have been out in the bond market borrowing as fast as they can.

As I've claimed before, I think they are sitting on piles of cash so that they can roll debt if it were to come due during a credit crisis.  Lots of companies got burned in 2008-2009, none moreso than GM and Chrysler.  Ford had been in the worst shape of the Big 3, and had gone out and borrowed all they could before the financial crisis.  They survived without filing bankruptcy, GM and Chrysler didn't.  As interest rates have gone down, companies have borrowed to have cash on-hand.  Likewise corporate profits are banked to provide a cushion for tight financial markets.  We are not at the cusp of large investment by corporations, we are witnessing businesses hunkering down until the storm passes.