Those geniuses at the WSJ nail it once again. Obama's economic policies have delivered consistent failure. Low rates have fueled financial speculation and movement of money here and there. But little actual growth and investment. Total failure. Thats what Democrats deliver.
The U.S. economy reported a 1.9% drop in productivity in the first quarter of the year, underscoring the trend of historically slow productivity growth in the current recovery. The slowdown isn’t entirely understood, but one certain cause is slower than usual business investment. Money that could go to wealth-creating innovations is going instead to financial deal-making.
Companies have announced more than $1.3 trillion of mergers and acquisitions world-wide so far this year, a surge of 23% from the same period last year and the most since the financial crisis. It’s not irrational exuberance that’s driving many of today’s deals—just the opposite. With fewer opportunities for growth but plenty of credit available to fund deals, mergers are often the most sensible way for a company to expand.
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Around the world, it’s the era of easy money, hard regulation and slow growth. Central banks have made dollars, euros and yen plentiful, but central governments have restrained businesses from putting that money to its most efficient use. Why take a chance trying to create a new product—and persuading the world’s bureaucracies to tolerate it—when you can buy an existing one?
In the U.S., the combination of loose monetary policy and restrictive government has created one of the great ironies of the Obama era. The labor-force participation rate of 62.7% persists at a 1978 level, and Americans who have jobs see little wage growth. But it’s a boom time for the Wall Streeters Mr. Obama vilifies, especially the attorneys and financiers who arrange corporate mergers.
Small companies are also struggling to find new customers and markets. A recent survey from the National Federation of Independent Business shows that the availability of credit is not the problem; business owners aren’t borrowing because they don’t know what to do with the money. Merely 5% of business owners reported that all their credit needs weren’t met. NFIB says that interest “rates are low, but prospects for putting borrowed money profitably to work have not improved enough to induce owners to step up their borrowing and spending.”
It is the story of this era. The Kauffman Foundation, which tracks new businesses, says its data show 2013 was “the second consecutive year to show an entrepreneurial activity decline in the United States.” Being an entrepreneur always takes guts. It takes special courage during an Administration that has twice set the annual record by issuing more than 81,000 pages of regulations.
But you wouldn’t know the challenges of the overall economy by observing the financial economy. The boom in corporate mergers has investment banks reporting surging advisory revenue. Dealogic reports that, world-wide, markets posted the best first quarter ever for equity capital deals, with initial public offerings, secondary stock sales and convertible bond offerings up 27% from the same period last year. Corporate debt issuance remains robust.
More at the source, WSJ Editorial page.
The U.S. economy reported a 1.9% drop in productivity in the first quarter of the year, underscoring the trend of historically slow productivity growth in the current recovery. The slowdown isn’t entirely understood, but one certain cause is slower than usual business investment. Money that could go to wealth-creating innovations is going instead to financial deal-making.
Companies have announced more than $1.3 trillion of mergers and acquisitions world-wide so far this year, a surge of 23% from the same period last year and the most since the financial crisis. It’s not irrational exuberance that’s driving many of today’s deals—just the opposite. With fewer opportunities for growth but plenty of credit available to fund deals, mergers are often the most sensible way for a company to expand.
***
Around the world, it’s the era of easy money, hard regulation and slow growth. Central banks have made dollars, euros and yen plentiful, but central governments have restrained businesses from putting that money to its most efficient use. Why take a chance trying to create a new product—and persuading the world’s bureaucracies to tolerate it—when you can buy an existing one?
In the U.S., the combination of loose monetary policy and restrictive government has created one of the great ironies of the Obama era. The labor-force participation rate of 62.7% persists at a 1978 level, and Americans who have jobs see little wage growth. But it’s a boom time for the Wall Streeters Mr. Obama vilifies, especially the attorneys and financiers who arrange corporate mergers.
Small companies are also struggling to find new customers and markets. A recent survey from the National Federation of Independent Business shows that the availability of credit is not the problem; business owners aren’t borrowing because they don’t know what to do with the money. Merely 5% of business owners reported that all their credit needs weren’t met. NFIB says that interest “rates are low, but prospects for putting borrowed money profitably to work have not improved enough to induce owners to step up their borrowing and spending.”
It is the story of this era. The Kauffman Foundation, which tracks new businesses, says its data show 2013 was “the second consecutive year to show an entrepreneurial activity decline in the United States.” Being an entrepreneur always takes guts. It takes special courage during an Administration that has twice set the annual record by issuing more than 81,000 pages of regulations.
But you wouldn’t know the challenges of the overall economy by observing the financial economy. The boom in corporate mergers has investment banks reporting surging advisory revenue. Dealogic reports that, world-wide, markets posted the best first quarter ever for equity capital deals, with initial public offerings, secondary stock sales and convertible bond offerings up 27% from the same period last year. Corporate debt issuance remains robust.
More at the source, WSJ Editorial page.