I Still Hate Neil Irwin - part the fifteenth

Neil keeps inching toward the truth, which is, of course, that the CxO class has been shivering in their boots for years. As has been predicted here for years, rate inversion was inevitable, just because those holding all that TARP, QE, and tax cut moolah accumulated over the last decade (and longer, to be honest) have been chasing fiduciaries rather than buying plant and equipment. And, naturally, driving up the price of Treasuries and driving down the interest rate. The Fed has only the most tenuous control of any interest rate, and that is a very short term one. Jawboning by fiddling with the Fed rate only works when doing so makes a modicum of sense. Only the Right Wingnuts foist the pablum of 'investment by business will end income inequality and create more, and better jobs'. Laff my ass off. And so on. Killing off the middle class consumer makes the Masters of the Universe feel better, which is to say, superior, but ends up killing the whole kit and kaboodle. It's been the American way from the get-go.

If you're a corporate C.E.O. making investment decisions, the environment in which operate is shifting beneath your feet. Even with a seemingly bottomless supply of cheap capital available and a very low corporate tax rate, it feels awfully risky out there.

And indeed, through the first half of the year, falling business investment was a drag on American economic growth.

And, by the way, the environment hasn't really shifted. Yes, The Manchurian President's tariffs are stupid and paid for by the USofA consumer, but the assault on the middle class has been ongoing since the start of the Housing Bubble. Hell's bells, the bubble happened just because the Masters sought risk-free (or, at least, risk-nearly-free) returns after the DotBomb. Fiduciaries looked like the best bet, since they didn't depend on finding profitable physical placements. What sort of fiduciaries should they embrace? Well, home mortgages have been rock stable for decades, so why not make lots of high priced ones, and package them up in securities? Just write some paper, and all those strung out lower middle class dopes would keep paying their escalating ARM mortgages and make the Masters rich. They wouldn't all default at once, would they? Of course they won't.

Laffer, where are you? If ever Supply Side Economics would be proven correct, the last decade of super cheap capital should have proved it. The unleashing of massive investment in physical capital by the Masters of the Universe!! Nah. The Masters have all chased Treasuries, happy to take the guarantee of paltry interest (paid for with the taxes of the underclass, of course). Masters, my sphincter.

Researchers from Wall Street financial firms and the Federal Reserve have concluded that companies used repatriated funds mostly to buy back stock.
-- Jim Tankersley/2019

Lots of knuckleheads bought a piece of some bridge over the East River.