The next financial crisis is just around the corner

A significant part of the reason that the $2tn cash pile held by US Corporations is sitting offshore is because of the tax avoidance schemes that encourage the diversion of US generated profits to escape Corporation Tax.

This a net outflow of money and wealth from the US.

The other significant reason is that it would cost US companies significant amounts of tax to bring foreign generated profits back home.

When the dollars are sitting offshore it is not doing America any good.

For it to do any good it needs to be invested in new or expanded business ventures in the US to create jobs.

Corporations see how badly the US government is run. They can see how fragile the US economy has become.
Multinationals see the problems happening in Europe and how badly the US government is run.
Neither have any incentive to invest in the US.

Large Corporations have no incentive to transfer their assets back into dollars in the US.

If you have a subsidiary in China you are going to keep your assets in Yuan and invest there - or South East Asia.

The US and Europe are now economic basket cases.

Who is now one of the largest hedge fund managers in the world?
Apple.
They are actively managing their huge cash pile.
But they are not investing it in themselves.
Nor are they investing in US assets.


Banks know the next financial crisis is just around the corner.
They don't trust each other.
Most are insolvent - they have overvalued their assets - that is why the Fed is bailing them out to the tune of $40bn a month in QE3.
They are currently keeping $2tn of "excess reserves". They are using it for speculation not loans.
The banks do not want to be reliant on short term financing when the next financial crisis blows up. Even the stupid bank CEO's can remember what happened in 2008 with short term liquidity.
The "excess reserves" are not real reserves at all. The bank's assets are overvalued - there is no requirement for them to value them at true market prices.
It is questionable if bank CEO's realise that they are over valuing their assets. There were plenty who didn't in 2007 and 2008.

Just like Europe's politicians the US politicians choose to kick the can down the road and do nothing to fix the problems in any way, shape or form whatsoever.
Until the can explodes under their feet.

The explosion (or implosion) is not that far away.

The current debt crisis is 7 to 25 times larger than the one in 2008.
The sovereign debt bubble is that many times larger than the housing bubble.
The fallout from the housing bubble has not been resolved - US house prices need to fall another 20% to get back into historical norms - they could well fall 40% (to the lower range of historical norms).

The US government (Dems and GOP) have just ensured that the US will see a recession start in 2013 with their farcical games for the Fiscal Cliff "deal".

Expect US credit downgrades, a significant rise in US unemployment and a significant recession.
Expect a very significant financial crisis within the next 2 or 3 years.