Comments on: "Capital spending faces big squeeze" http://www.nakedcapitalism.com/2007/06/capital-spending-faces-big-squeeze.html Sun, 22 Nov 2009 11:45:14 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: unlawflcombatnt http://www.nakedcapitalism.com/2007/06/capital-spending-faces-big-squeeze.html#comment-119 unlawflcombatnt Mon, 25 Jun 2007 20:55:00 +0000 http://www.nakedcapitalism.com/2007/06/capital-spending-faces-big-squeeze/#comment-119 <i>One of the hopes, or more accurately, fantasies of a few months ago was that increased business investment would offset slowing consumer spending. This forecast defied basic logic. <b>Why would businesses take on more risk if consumer buying, the big driver of the economy, was sluggish? One would expect lower rather than higher capex.</b><br/></i><br/><br/>Exactly. I was wondering when someone would finally comment on this illogical fantasy. If consumers are <b>not</b> buying goods, then there's no reason to increase capital investment to produce more goods. Less demand for production would logically lead to less capital investment to provide that production. This is more than just good economics. It's plain common sense. <br/><br/><a HREF="http://www.unlawflcombatnt.proboards84.com" REL="nofollow">Economic Populist Forum</a> One of the hopes, or more accurately, fantasies of a few months ago was that increased business investment would offset slowing consumer spending. This forecast defied basic logic. Why would businesses take on more risk if consumer buying, the big driver of the economy, was sluggish? One would expect lower rather than higher capex.

Exactly. I was wondering when someone would finally comment on this illogical fantasy. If consumers are not buying goods, then there’s no reason to increase capital investment to produce more goods. Less demand for production would logically lead to less capital investment to provide that production. This is more than just good economics. It’s plain common sense.

Economic Populist Forum

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