Home > The Economy > According to the Wall Street Journal takeovers are booming.

According to the Wall Street Journal takeovers are booming.

from David Ruccio

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According to the Wall Street Journal,

Takeovers are booming as companies gain more confidence about the economy, use stockpiles of cash to reach for future growth and get boosts from low interest rates and the surging stock market.

At the current pace, mergers-and-acquisitions volume for the full year would exceed $3.7 trillion, making it the second-biggest year in history after 2007. Among the deals proposed or announced so far this year, 15 are valued at more than $10 billion, the highest such number on record, says Dealogic.

As we know, these deals may boost corporate profits but will do nothing to create new jobs, much less stem the rise in inequality in the United States. They’re likely, in fact, to have the exact opposite effect.

  1. BC
    April 11, 2015 at 4:22 pm

    . . . [T]hese deals may boost corporate profits but will do nothing to create new jobs, much less stem the rise in inequality in the United States. They’re likely, in fact, to have the exact opposite effect.”

    During debt-deflationary regimes (Schumpeterian depressions, the slow-motion variety this time around), mass cross-industry consolidation is the norm, including asset spin-offs, elimination of lines of business, mergers of large cash-rich firms, acquisitions of competitors’ profitable businesses and small firms’ technology, and large job cuts.

    This is likely to continue for years as demographics drag effects bear down with slow or no top line revenue growth and hyper-financialization and a record low for labor’s share of GDP reducing productivity and the decelerating trend of real GDP per capita.

    But the “solution” being engaged in by the TBTE banks, central banks, and their top 0.001-1% owners is ZIRP/NIRP and QEternity to flood the financial system with bank reserves to lever up bubbly financial assets to prevent a debt-deflationary regime, as well as to fund deficits indefinitely to prevent nominal GDP from contracting with price deflation. This “solution” is devised by the top 0.001-1%, of themselves, and for themselves.

    In the meantime, total annual net flows to the US financial sector equal annual output of GDP, resulting in all labor product, profits, and gov’t receipts being pledged to, and thus absorbed by, the financial sector, the financialized sectors, and the principal owners of same.

    The only way out is a debt jubilee (and asset deflation for the top 0.001-1% to 10-20% who own 93% of overvalued financial assets hoarded at no velocity and receive 60% of income, a growing share from rentier sources and financialized sectors), eliminating fractional reserve banking, phasing out social welfare programs and replacing them with a basic income guarantee, and a highly progressive net energy and wealth and rentier speculation taxes to replace taxes on payrolls and household and business income.

  2. April 11, 2015 at 4:40 pm

    How much of the money that is being used is from cash on hand versus financing by the banks?

  3. April 12, 2015 at 10:28 am

    On sector level they won´t even boost corporate profits. They just make the management look successful in a world of shrinking growth prospects. Meanwhile “effective” competition “goes down the drain” and this in fact is the most worrying aspect of the whole story.

    SLE

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