Saturday, December 19, 2015
The Bank of Japan has begun a modest purchase of the stock of Japanese firms that expand the economy by investing in their factories or by raising workers’ pay. “The BOJ is doing what it can to support capital spending and investment in human resources” says the Bank’s governor. In contrast, the American central bank buys billions of dollars buying bonds owned by banks. U. S. “corporations have tapped the markets for trillions of dollars in recent years, yet they have plowed relatively little of the money into new operations.” American firms have been on a binge of buyouts and mergers further adding to oligopolies. The stock market and junk bond markets love this. “Business investment as a percentage of gross domestic product has remained below historical levels since the Great Recession. “ The government has not helped. “Public investment spending as a share of overall economic activity has fallen to lows not seen since the 1940’s. (NYT Dec. 18, 2015 p. B-8) This has pleased the Tea Party and other “know nothings.” But it has done nothing to fill road chuck holes and repair dangerous bridges. Meanwhile American passenger rail lines are the laughing stock of Europe and its high speed trains.