When we think of times of speculative excess, the images that come to mind are of vast malls in oil towns built with borrowed money, internet IPO-selling brokers betting fistfuls of cash on point spreads, governments building bridges to nowhere. Animal spirits, in others words. The triumph of belief in the future.

Oddly, one large financial bubble that's currently inflating has nothing to do with over-bold builders of enterprises. Quite the contrary. Synthetic Collateralized Debt Obligations, or synthetic CDOs, are in demand because there aren't enough businessmen ready to bet their companies on rolls of the dice. US and European corporations came out of the last recession behaving like scared children, huddling in corners, unwilling to accept new risks. There have been huge increases in cash flows that came from the modest recovery in demand, the aggressive cost cutting, and, in the US, big tax cuts. However, the cash has been used to pay down debt, build up cash positions, buy back stock, and pay down the costs of past over-investment, rather than to expand capacity or build new enterprises.