What is the right way to spend all that cash?

One of the most striking aspects of the ‘muted' economic recovery in the Anglo-Saxon world is the mismatch between beleaguered consumers, embattled governments and resurgent corporates.

Independent economist Andrew Smithers of Smithers & Co recently published a report on the global economy that boasted a fascinating graph charting the accumulation of cash on the balance sheets of corporate America. Cash balances are inexorably increasing as profitability is restored to almost pre-crisis levels. The obvious question for this contrarian type is whether this is the right way to spend the cash? Smithers’ data suggests corporate capital expenditure, though increasing, is nowhere near peak levels from a few decades back. Money spent on wages is also increasing, partly through...