Monday, September 12, 2016
Assets, debt and Ponzi
This is about US corporations and stock markets. But the mechanisms apply to any asset market including of course housing. Despite poor earnings US corporations are loading up on debt, using their (current, temporary) creditworthiness / collateral, to pay out dividends and buy back shares to boost their price. But households and consumers are not borrowing enough to boost demand, and corporations aren't investing productively. The Titans of 'industry' are devouring their own children to enrich themselves and impoverish everyone else. The Titan Cronus devoured his own children so that none would dethrone him - but in the end they did.