The Austerians’ Secret Plan to Devastate Corporate Profits

Speaking of balances, late last week Martin Wolf delivered a helpful column (“Why cutting fiscal deficits is an assault on profits,”  FT Nov. 24).  Wolf writes that if households are cutting back, a government that attempts to reduce deficits while anticipating no substantial changes in net exports must expect corporate surpluses to shrink.  But increased investment is unlikely, so:  “If the government wishes to cut its deficits, other sectors must save less. … What the government has not admitted is that the only actors able to save less now are corporations. The government’s – not surprisingly, unstated – policy is to demolish corporate profits.”

Wolf is consistently worth the read.