Wednesday, January 30, 2013

All cashed up with no where to grow

KDrum and Ezra are mystified. They can't imagine why multinational corporations are hoarding cash in these amounts: "Total liquid assets held by nonfinancial corporations have increased from 7.7 percent of GDP to 11.3 percent of GDP."

Kevin is looking for an answer:
I'm not sure. But for 15 years the people with money to bet have been betting that they'll get better returns investing in financial instruments than they will by investing in expansion of existing products and the invention of new ones. Until we figure out why, we're going to be stuck with a combination of sluggish growth and financial bubbles as far as the eye can see.
The obvious answer is -- pure greed. Almost everybody in that crowd wants instant Bain level returns on their capital. No profit in invention because, Charlie's first rule of economics. The big money is in acquisition and liquidation. The social cost of this branch of cannibal capitalism doesn't even show up on the spreadsheets.

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