"If you peruse the flow of funds, and you'll see that corporate-sector cash assets have increased by $279 billion since the December 2007 peak, and now total $1.72 trillion. According to the same data, non-financial, corporate-sector debt has increased by $480 billion and now stands at $7.2 trillion. Corporate debt net of cash has actually increased by $200 billion during the Great Recession."
For corporations the credit bubble never burst. If consumer prices fall the way home prices have the corporations could find themselves suddenly in debt over their heads the way home owners did. That may well be the reason for the cash cushion - which in an environment of greater business confidence might have gone into hiring and propping up demand. Stockman is right, this is not a normal business cycle and traditional countercyclical policies don't work.