The Capital Conundrum

The Wall Street Journal has a front page story today titled
Huge Flood of Capital to Invest Spurs World-Wide Risk Taking (subscription required- ugh).

Reading this piece makes me wonder why all that capital isn’t being applied to productive uses like building infrastructure in the developing world or finding new sources of non-petroleum based energy.

The Journal story suggests the capital is flowing into ever riskier and leveraged bets in search of returns.

I wonder if the globilization phenomenon combined with the ongoing transition to an information based economy from a manufacturing based economy means that the capital requirements of innovation and forward progress are going down, leaving excess capital sloshing around the globe in search of returns that can’t be delivered.

Thoughts?