Re:NY Fed rescues overnight lending market with $53B
by coliveira on Tuesday September 17, 2019 @05:54PM
(#21000491)
QE is a pretty sneak way to keep a stagnated economy going. And, lets be clear, the stagnation is happening because trillions of dollars are hoarded in financial schemes whose only goal is to produce interest, not on producing anything. The biggest example we have is the way big corporations are furiously repurchasing their own stock. This is a huge fortune spent every few days for no productive reason, with the only goal of making big company returns to look more attractive than they are. All the money pumped in this economy is going for share repurchasing programs, stock market investments made by funds in these same companies, real state speculation, and a small portion into venture capital for companies that for their own nature have uncertain returns.
[ Parent
| on HN ]
Re:NY Fed rescues overnight lending market with $53B
by alasdair_ on Tuesday September 17, 2019 @06:21PM
(#21000688)
>The biggest example we have is the way big corporations are furiously repurchasing their own stock. This is a huge fortune spent every few days for no productive reason, with the only goal of making big company returns to look more attractive than they are.
Stock buybacks are the same thing financially as a corporation issuing dividends except that with a buyback, the holder isn't forced to take a taxable event. It's almost always better for the owners to receive buybacks rather than dividends, especially if the owners pay income taxes.
Re:NY Fed rescues overnight lending market with $53B
by coliveira on Wednesday September 18, 2019 @12:35AM
(#21002409)
They're not the same thing financially: with dividends, it is much easier for shareholders to invest the money in some other company that is better managed. Stock buybacks give the illusion of profit growth, when in fact the profits per share are engineered by company executives. The biggest winners in this arrangement are without question the executives, who practically guarantee share growth and, therefore, large bonuses.
Re:NY Fed rescues overnight lending market with $53B
by shuckles on Wednesday September 18, 2019 @01:47AM
(#21002659)
It is not an illusion. Companies state the buyback amounts and outstanding shares. The market for the most part is quite savvy and knows how to price in these mechanical changes. Nobody is being fooled at scale.
Re:NY Fed rescues overnight lending market with $53B
by navigatesol on Wednesday September 18, 2019 @01:44PM
(#21007920)
Oh brother. There's no illusion. I guess the average guy off the street doesn't get it, but no one in the finance world is fooled into believing a share buyback increased profit. Not a single one. It decreases share count in exchange for cash. Pure balance sheet transaction.
Re:NY Fed rescues overnight lending market with $53B
by kortilla on Tuesday September 17, 2019 @06:17PM
(#21000660)
Stock purchases are no different than dividends, which have been around forever. The only difference is being forced to realize tax gains (on the shareholders’ parts).
Returning money to shareholders is much better than pissing it away on whimsical experiments because the market is a better investor than some exec board at a company sitting on cash.