Top of the News: The significance of Kraft's $16.4 billion hostile bid for Cadbury is that the Smart People (you know, the ones who cooked up credit default swaps) believe it heralds a return of animal spirits to the wounded capital markets. No wonder the Dow touched a 52-week high today.

These kinds of deals rarely deliver what they promise to shareholders, and they result in heavy job losses at the acquired company (how else are they "paid for"?). They reduce competition and choices for consumers. Yet after decades of lax antitrust enforcement they go on, largely because they are so lucrative for CEOs, investment bankers and lawyers who control the show.

Kraft's move is also motivated by another usual suspect: its sales are suffering in the recession, materials costs are rising and Wall Street must be placated. That's the point: The real economy is still sick. If Kraft gets a short-term boost by the deal, it won't change this reality. Meanwhile, most businesses will be wondering why they can't get the capital to build productive work while Kraft can assemble it for a speculative, anti-competitive play.

The Back Story: As America struggles in a worse-than-jobless recovery, I continue to lament D.C.'s inability/unwillingness to focus stimulus on future-focused infrastructure that would create stable jobs. Blogger Ryan Avent takes this one step further, wondering what would happen if the nation could get just one year of the defense budget for infrastructure.

"With that kind of money you could entirely build out a national network of true high-speed rail. One year's worth of defense spending gets you that. Which makes one wonder: where are all the economists, wringing their hands over cost-benefit analyses of these defense expenditures? Does anyone doubt that the net benefit of $100 billion spent on high-speed rail is easily higher than that for the last $100 billion spent on defense?"

The defense bill is $200 billion more than the entire transportation reauthorization bill. Consider also how much further ahead we are in military spending than any potential adversary.

We do have economic adversaries, however, and they are spending big on rail, research, building top-notch universities, etc.

Avent writes, "I don't get it. I'll never get it." Nor do I, except the Military Industrial Complex that President Eisenhower warned us against has much more money to lobby Congress to maintain the status quo.

Today's Econ Haiku:

No jobs, no health care
But Wall Street's back in the green
Change? Or petty cash