Krugman: Profits surge - where's the investment?

[dave_p]

Paul Krugman, "Another Economic Disconnect", New York Times Apr 29, from http://welcome-to-pottersville.blogspot.com/2007/04/paul-krugman-another-economic.html">Welcome to Pottersville

"You might have expected this gusher of profits, which surely owes something to the Bush administration’s pro-corporate, anti-labor tilt, to produce a corresponding gusher of business investment. But the reality has been more of a trickle....

"It’s possible that sluggish business investment reflects lack of confidence in the economic outlook.... there is a more disturbing possibility. Instead of investing in physical capital, many companies are using profits to buy back their own stock. And cynics suggest that the purpose of these buybacks is to produce a temporary rise in stock prices that increases the value of executives’ stock options, even if it’s against the long-term interests of investors....

"In any case, next time someone tells you that any action that might reduce corporate profits a bit — like actually enforcing health and safety regulations or making it easier for workers to organize — will reduce business investment, bear in mind that today’s record profits aren’t being invested. Instead, they’re being used to enrich executives and a few lucky stock owners."

[whistle]

1. There has been no Bush economy, it has been economic looting

...and reverse distribution of wealth to the rich. Next on the agenda will be the bargain selling or giving away of the national public infrastructure and national heritage goes on the market at, you guessed it, no bid contracts.