Capital Investment

[morganist]

Quote from nutmeg:

You could probably run a dozen business plans in a dozen sectors and come to the same conclusion, all the easy money is gone. You'll be left with a cash churning zombie.

A business may support dozens of regulatory industries with little profit incentive.

R Wagnor of GM was the first to admit he was running a health and pension business, not an auto company.

Suppose a model is profitable. Round 2 is the risk associated with the business. Obviously we can't insure against all risk but there is high risk in unknown litigation, unforeseen legislation, to name a few.

Imo, we can't assign a politcal party to the problem, it's the culture of current politics to bash business.
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This has partly been down to the limitations in the banking system due to the constraints on lending required by the higher reserves demanded on banks.

Bernanke has done all he can do in his regard, Congress need sto redefine various business incetives. Imo, our biggest hurdle is going to be the EPA, unelected beaurucrats who put fear in the hearts of lawmakers.

As an example, Bush could not find anyone to ally with him against Fannie and Freddie. How did we let any agency get so large with so much power? We all know how that worked out. Well the same with the EPA, this agency is unmanageable for a corp to navigate.

They have a huge labour force they could make it so that new businesses do not have to pay any tax for two years. This will make money poor into investment because the returns will be higher than the other investments. This would not affect tax revenue as these people are not working anyway. They could liberalise the labour market by reducing the legislation on employment. There are loads of things they could do if they weren't so obsessed with taxing people to get their hands on their money.

I think people have misread the point I was making. You can get big infrastructure projects running from the private sector as well as the public sector. This would make the economy recover and creates demand in itself because the employees earn money which they then spend. The investors receive return because they run it like a turnpike trust. There is room for this kind of growth. In addition to that the market is to sell to the BRIC countries not to borrow from them. They want tools and machinery that help their economy grow. This is what I am suggesting. It has nothing to do with the domestic demand constraints or the domestic supply constraints. In this case the demand and investment would come from abroad. The limiting factor especially in the case of america is that the employment laws are so strong that the cost of such a project is better somewhere else. The immediate tax of anyone who is successful and in the first couple of years of functioning is killing the free market and it is the free market the government expects to pay the debt.

The government of the US and Britain need to start encouraging foreign demand and investment. And this will take the form of capital investment and capital goods to help their own economies grow.