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The Financial Times reports that U.S. corporations are flush with cash and plan to use it to…..engage in stock buybacks. “From an economy-wide perspective,” frets Matt Yglesias, “a general perception among firms that increased buybacks are the way to go is a sign of a world in which the people running successful businesses don’t see profitable investment opportunities.”

Yep. And the same was largely true during credit bubble of the aughts. It’s one of our economy’s most fundamental problems: increasingly, investors simply don’t believe that there are great opportunities to invest in the real world. So instead they invest in the shiny, bubbly financial world. This is, needless to say, not a good thing. In the long run, it’s only investment in the real world that provides sustainable growth and prosperity, and it’s only rising income and consumption among the broad middle class that makes the real world an attractive investment opportunity in the first place. Our ruling classes need to figure this out pronto.

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