Re:Stock buybacks are dangerous for the economy
by rmrfstar on Tuesday March 17, 2020 @01:25PM
(#22607422)
Thanks for pointing out a rebuttal.
Taking a step back from "good or bad?"... One thing I haven't seen outside the academic literature is a discussion of the leverage ratchet effect [1]. Buybacks are just one lever that actuates the ratchet. A question worth asking: "why has corporate leverage increased so much over the past 30 years?" I don't claim to have an answer, but asking that question could shed some light on whether buybacks are "good or bad".
Taking a step back from "good or bad?"... One thing I haven't seen outside the academic literature is a discussion of the leverage ratchet effect [1]. Buybacks are just one lever that actuates the ratchet. A question worth asking: "why has corporate leverage increased so much over the past 30 years?" I don't claim to have an answer, but asking that question could shed some light on whether buybacks are "good or bad".
[1] https://www.gsb.stanford.edu/faculty-research/working-papers...