Copyright © 2007 Ed Bagley

Two seemingly unrelated stories caught my attention yesterday. One was about corporations stockpiling cash and the other was about consumer savings rates.

Some American corporations really know how to sock it away.

ExxonMobil ended its 2006 first quarter with $36.5 billion (not million, but billion) cash in hand, according to USA Today, giving the world's No. 1 oil company more cash than any company in the USA.

Could you even imagine having $36.5 billion in your savings or retirement account? That is a lot of moolah, or serious money for people in the know.

Microsoft was close behind with $34.8 billion in cash. Microsoft's savings were even more significant when you remember that Microsoft paid a $32 billion one-time dividend in 2004 after starting an annual dividend program in 2003.

Johnson & Johnson was a distant third with $17.2 billion, but even $17.2 billion is a staggering figure.

Industrial companies in the Standard & Poor's 500 had stuffed their corporate piggy banks with $642.7 billion by June of 2006. Imagine just the interest a company generates on its retained earnings. ExxonMobil earned $946 million in 2005. dedecms.com

The savings rates of consumers are just the opposite.

In 2005 personal savings rates of consumers moved into negative territory for the first time according to the U. S. Commerce Department.

That means consumers not only spent all of their after-tax income but dipped into existing savings or borrowed money, often with credit cards (the scourge of modern American finance) to cover their spending.

This is a fact that I learned from QSR, which is a trade magazine that covers the restaurant and fast food industry. QRS follows consumer spendable income.

By law other monies evaporate from retirement savings accounts through forced distributions. Your government loves to keep consumers spending so the economy grows, and it could care less whether retirees actually need to withdraw their retirement funds early.

Your government cannot keep its nose out of your business, or its hand out of your pocket.

Credit card companies did very well during this period. CBS reported that in 2004 credit card companies collected $14 billion in penalty charges and other fees, accounting for nearly half of the industry's $33 billion in profits.