News Links 03/01/2012

  • governments spend money (at least in principle) to promote long-term growth and employment, to invest in public infrastructure, research and development, provide health care and other basic economic functions. Banks have a more short-term time frame. They lend credit against collateral in place. Some 80% of bank loans are mortgages against real estate. Other loans are made to finance leveraged buyouts and corporate takeovers. But most new fixed capital investment by corporations is financed out of retained earnings

    tags: banks government credit mmt

Posted from Diigo. The rest of my favorite links are here.

  1. David Lazarus says

    At the moment current business investment has no other option than being financed out of retained earnings. Though very large companies also have better credit availability so are able to borrow at very low rates even though they have little need for capital right now. SME’s are still effectively frozen put of credit markets because of tougher lending criteria from banks so have no option to finance from retained earnings. That is especially true in the UK right now and I suspect in the US as well.

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