Record year for stock buy-backs, at the expense of future growth

[Kwatt]

70% isn't a static figure. the traditional equation for an economy is GDP = C(onsumer spending) + I(nvestment) + (net e)X(ports) + G(overnment). if one of those 4 goes down, another can go up to maintain the same GDP.

Well with C down and lower CapEX from corps. I is down. That leaves X and G. X would be my first choice but I am sure the Gov. can spend more.

problem is that wages are sticky downward. so rather than end up with the same number of people employed at lower average wages, you end up with fewer people employed. if that unemployment number reaches too high, you get rather nasty things like armed insurrection.

I would rather avoid the whole "armed insurrection" part.

let's be really clear: manufacturing hasn't declined, the number of people employed manufacturing has. productivity has shot way up. and when productivity shoots up, you can produce the same with fewer people. you may reach a malthusian scenario brought on by technology making people obsolete rather than just population growth.

the other issue is that the economy may be changing faster than people can realistically adapt. it takes money and time to retrain.

Lack of training never ends well.

there's something nice about working with your hands and getting things accomplished. but that same sort of saving behavior that individuals automatically do when the outlook goes negative just becomes a self-reinforcing cycle on the economy when done in aggregate.

I am not going to stop. So, somehow the difference is going to have to be made up by someone else.

government got us through the worst of it. deficits have fallen way off their peaks.

There is still a lot of people underwater on the mortgage. And at least one I know is reluctant to buy. My niece and her husband are living in his parents basement. And both said they won't buy till they can pay cash for a house.

blame the states. the total cost of college on an individual student basis hasn't been much rising at a rate much different from inflation. what's happened is the states went from funding 50% to funding 10%.

Why doesn't bother me as much as how to fix it. And the possible problems it may cause later.

probably not. are those back?

http://www.rapidcarloans.net/subprime_car_loans.html

There are sub-prime auto lenders in US who offers low rate as to increase their profit ratio by offering loan to people having bad credit as per their requirements.

Thank for the info

.

 

[MagickMan]

The government isn't a business. It is not run like one, nor should it be run like one. They do not have the same goals.

That's an excuse used by those in government who can't control their own spending. Their complete and utter failure over the last 14 years is proof of that.

 

[fskimospy]

That's an excuse used by those in government who can't control their own spending. Their complete and utter failure over the last 14 years is proof of that.

No, it's basic public policy. Businesses exist to make money. Governments exist to provide services. Those are two very, very different priorities.

Treating the government like a business is a similar mistake to the one where people try to compare government debt to household debt. They sound intuitive and appealing on their surface, but represent a deeply flawed understanding of how the world works.

 

[MagickMan]

It was becoming deeply "service oriented" that has gotten us into our financial meltdown. When we can no longer afford to pay the interest on our debt, what then? Hit the reset switch and watch a global panic, as 100s of millions die in the ensuing stampede for basic necessities?

 

[Matt1970]

No, it's basic public policy. Businesses exist to make money. Governments exist to provide services. Those are two very, very different priorities.

Treating the government like a business is a similar mistake to the one where people try to compare government debt to household debt. They sound intuitive and appealing on their surface, but represent a deeply flawed understanding of how the world works.

Choke off that ever increasing credit limit the Government has and they become very similar very quickly.

 

[fskimospy]

Choke off that ever increasing credit limit the Government has and they become very similar very quickly.

No they will never be the same, regardless of resources available to them.

Use your head for a minute and think about what governments do.

 

[Matt1970]

No they will never be the same, regardless of resources available to them.

Use your head for a minute and think about what governments do.

Use your head for a minute and realize the only reason out Government can spend what it does is because of the endless credit limit increases afforded to us. The services the government performs is irrelevant. It's still money coming in vs. money going out.

 

[fskimospy]

Use your head for a minute and realize the only reason out Government can spend what it does is because of the endless credit limit increases afforded to us. The services the government performs is irrelevant. It's still money coming in vs. money going out.

/facepalm

The difference in what they do is the whole point. You don't want multiple armies competing to defend the country. You don't want multiple roads going along the same route just to compete. You don't want rival police departments, etc. that means that each of these service sectors exists with a natural monopoly. If the government were a business that would mean that they should naturally use that monopoly to extract maximum profit through that monopoly.

That's what you're advocating for. Basically making everything into Comcast. Now that you've thought about that, does that sound like a good idea?

 

[shady28]

That article is very misleading and smacks of a lot of political bias.

That said, the underlying economic question really boils down to :

Can these companies find nothing better to do with their cash and financing than buying back their own stock?

If you are in an industry / business that is growing then one would think expansion, R&D, marketing etc would all be much higher on the priority list. At least one would expect to see that in the aggregate (you'll always find exceptions), but in the aggregate the companies are just buying their own stock back.

I think the massive stock buyback programs are a difficult to hide by-product of an economy that has actually been stalled for a decade or more, regardless of what Gov't GDP numbers say

 

[Matt1970]

/facepalm

The difference in what they do is the whole point. You don't want multiple armies competing to defend the country. You don't want multiple roads going along the same route just to compete. You don't want rival police departments, etc. that means that each of these service sectors exists with a natural monopoly. If the government were a business that would mean that they should naturally use that monopoly to extract maximum profit through that monopoly.

That's what you're advocating for. Basically making everything into Comcast. Now that you've thought about that, does that sound like a good idea?

Maximum Profit? Our government couldn't turn dime one in profit. The GSE's were a big contributing factor in crashing the economy and the actual few businesses the do run rely heavily on subsidies. And who said anything about having armies compete? And if you want to talk about competition, we have Republicans and Democrats competing all the time for how to run the business we call a Government so no matter which way you look at it your comparison falls flat on it's face. I refuse to get into another multi page discussion with you picking and choosing which facts you wish to use to make your argument while blindly ignoring the elephant in the room. I have better things to do. Besides, MagickMan summed it all up in one sentence,

That's an excuse used by those in government who can't control their own spending.

 

[fskimospy]

Maximum Profit? Our government couldn't turn dime one in profit. The GSE's were a big contributing factor in crashing the economy and the actual few businesses the do run rely heavily on subsidies. And who said anything about having armies compete? And if you want to talk about competition, we have Republicans and Democrats competing all the time for how to run the business we call a Government so no matter which way you look at it your comparison falls flat on it's face. I refuse to get into another multi page discussion with you picking and choosing which facts you wish to use to make your argument while blindly ignoring the elephant in the room. I have better things to do. Besides, MagickMan summed it all up in one sentence,

This is just nonsensical ranting.

 

[MagickMan]

This is just nonsensical ranting.

When you've lost an argument, it always is. :|

 

[Matt1970]

Better luck next time eskimospy.

 

[fskimospy]

When you've lost an argument, it always is. :|

Lol, whatever you guys need to tell yourselves. I eagerly await either one of you addressing the points I raised, because I meant it when I said that what Matt wrote was nonsensical rambling.

The government running a specific business does not make the government itself a business. People competing to see who gets to run the government does not mean that the government is competing in the services it provides. The fact that he brought up how absurd the idea of competing armies was shows that on at least some dim level he knows I'm right.

Then again this is the guy who can't use a dictionary correctly. (Seriously)

 

[Engineer]

The difference between this recovery and every other recovery before it is that we had manufacturing to lead us out then.

I'm sure that there are many going to blast me for saying this but I couldn't agree more with your statement. The great next thing was supposed to be the service economy. Selling things to each other instead of making things for everyone.

Ross Perot says "I told you so".

 

[Zaap]

No, it's basic public policy. Businesses exist to make money. Governments exist to...

...take that money and overspend it down an endless rathole, borrow more, spend that down an endless rathole, pat themselves on the back and hang the massive debt on the next generation of taxpayers.

Yeah. We know.

 

[Matt1970]

Lol, whatever you guys need to tell yourselves. I eagerly await either one of you addressing the points I raised, because I meant it when I said that what Matt wrote was nonsensical rambling.

The government running a specific business does not make the government itself a business. People competing to see who gets to run the government does not mean that the government is competing in the services it provides. The fact that he brought up how absurd the idea of competing armies was shows that on at least some dim level he knows I'm right.

Then again this is the guy who can't use a dictionary correctly. (Seriously)

You think nobody else can see through your bullshit. Someone mentions that it's a poorly run "business" you immediately begin frothing at the mouth. You then have to go to the extreme of comparing it to K-Mart and Wal-Mart competing with each other which is not what we were doing, and then make your argument based on that comparison. Whether you want to come to terms with it or not, the Government is very much like a business. It takes in money, albeit forcible, and then pays employees to perform it's services. Just because there and some things a Government does that private businesses aren't suited for or is impracticle doesn't make them not similar. You can accept it or not.

 

[Jhhnn]

Gotta love how the usual denialists can duh-vert any topic into anti-gubmint raving.

Govt borrowing & stock buy-backs are related in what way, exactly?

Because they both involve money?

Because y'all need to talk about something else, because the discussion gets a little too close to bruising your well cultivated delusions, or what?

 

[Matt1970]

Gotta love how the usual denialists can duh-vert any topic into anti-gubmint raving.

Govt borrowing & stock buy-backs are related in what way, exactly?

Because they both involve money?

Because y'all need to talk about something else, because the discussion gets a little too close to bruising your well cultivated delusions, or what?

Because it was suggested that Government punish those companies it feels are not spending their money wisely. It was then pointed out that Government shouldn't be telling anyone how to run their company(see US Debt Clock). I know it is a hard concept for you to accept since you think you know how to better spend money than the people who actually know how to make it.

 

[fskimospy]

You think nobody else can see through your bullshit. Someone mentions that it's a poorly run "business" you immediately begin frothing at the mouth. You then have to go to the extreme of comparing it to K-Mart and Wal-Mart competing with each other which is not what we were doing, and then make your argument based on that comparison. Whether you want to come to terms with it or not, the Government is very much like a business. It takes in money, albeit forcible, and then pays employees to perform it's services. Just because there and some things a Government does that private businesses aren't suited for or is impracticle doesn't make them not similar. You can accept it or not.

Actually the fact that a lot of what government does is work that is explicitly not amenable to 'business' as we know it is exactly why you don't compare the two as they don't have the same goal.

 

[waggy]

I'm sure that there are many going to blast me for saying this but I couldn't agree more with your statement. The great next thing was supposed to be the service economy. Selling things to each other instead of making things for everyone.

Ross Perot says "I told you so".

yeah. i have said this for years. we are trying to ignore blue collar jobs when talking to our youth. all that has done is fuck the nation over.

as for Ross Perot it's fucking scary how right he was. not that i think would have made a good president though.

 

[LegendKiller]

I'm sure that there are many going to blast me for saying this but I couldn't agree more with your statement. The great next thing was supposed to be the service economy. Selling things to each other instead of making things for everyone.

Ross Perot says "I told you so".

It's a no-brainer at this point. We sacrificed our economy on the altar of "free trade", but we refuse to force *TRADE*. We naively get fucked over by the world while we maintain our nubile vision of what "free trade" should be. Japan fucked us over in the 90s by not allowing our goods to compete with theirs. China is doing it own by not allowing our labor compete with theirs.

But we march along, eating our McDonalds and driving our SUVs, being fucked up the ass with a splintered broompole and we *GRIN* about it the entire time. It's almost like we like it, because we are told to.

Ohh sure, we have cheaper goods at Wal Mart, but we NEED those cheaper goods because our jobs fucking suck. Who else would buy expensive goods?

This is the insane logic these days. Nobody stops to think that the feedback loop is working in reverse. We need cheap goods because we have shit jobs which makes us overseas jobs and increase dependency on cheap goods, which makes us lose jobs....etc.

Nope, land of the jobless, home of the brave.

And it's both sides of the aisle doing it to us. They don't give a shit. They get sweetheart deals from revolving doors, Chinese companies paying them off, legal insider trading.

Meanwhile we get duhverted by wedge issues like gay marriage. If it wasn't so fucking sad you'd laugh at how easily we swallow this shit. The Chinese, Russians and Japanese love it.

 

[Engineer]

It's a no-brainer at this point. We sacrificed our economy on the altar of "free trade", but we refuse to force *TRADE*. We naively get fucked over by the world while we maintain our nubile vision of what "free trade" should be. Japan fucked us over in the 90s by not allowing our goods to compete with theirs. China is doing it own by not allowing our labor compete with theirs.

But we march along, eating our McDonalds and driving our SUVs, being fucked up the ass with a splintered broompole and we *GRIN* about it the entire time. It's almost like we like it, because we are told to.

Ohh sure, we have cheaper goods at Wal Mart, but we NEED those cheaper goods because our jobs fucking suck. Who else would buy expensive goods?

This is the insane logic these days. Nobody stops to think that the feedback loop is working in reverse. We need cheap goods because we have shit jobs which makes us overseas jobs and increase dependency on cheap goods, which makes us lose jobs....etc.

Nope, land of the jobless, home of the brave.

And it's both sides of the aisle doing it to us. They don't give a shit. They get sweetheart deals from revolving doors, Chinese companies paying them off, legal insider trading.

Meanwhile we get duhverted by wedge issues like gay marriage. If it wasn't so fucking sad you'd laugh at how easily we swallow this shit. The Chinese, Russians and Japanese love it.

I've said it before...I would vote for you for President.

:thumbsup:

What's really sad is that there are many (including this very forum) that ignore your 'no brainer' part and keep chugging along with the 'it's better for us' and 'we don't need manufacturing'. (Anyone: No need to reply to this part of my comment as it will do nothing to change my mind on the subject. The US economy pretty much speaks volumes on the subject).

 

[Jhhnn]

Because it was suggested that Government punish those companies it feels are not spending their money wisely. It was then pointed out that Government shouldn't be telling anyone how to run their company(see US Debt Clock). I know it is a hard concept for you to accept since you think you know how to better spend money than the people who actually know how to make it.

I don't agree wih the punishment part at all. OTOH, if we just taxed capital gains progressively the same as earned income then this stock buyback scam wouldn't exist.

It only enhances shareholder value if they sell.

They're artificially holding stock prices high so that insiders can cash in, pay LTCG rates rather than earned income rates on dividends that would otherwise be paid. When the buybacks end, the stock price will fall, & insiders will buy it back at that lower price if they want.

Make money? The govt makes money. The rest of us just pass it around, other than what's getting parked in corporate coffers.

 

[realibrad]

That's throwing the baby out with the bathwater. You want to get rid of TBTF you mandate that banks cannot have more than 2% of the country's deposits and cannot have a leverage ratio over 10:1. Watch the entire sector shed branches, assets, and get much, much smaller.

That wont work, and here is why.

Part of the problem with the collapse in 2008 was not that 1 bank failed. The reason is that the toxic assets were split and spread all over the industry. Everyone was attached to everyone else. So when 1 bank failed the other would have to as well. This caused a cascade effect.

Overnight lending seemed like a safe bet, because the banks thought they could just get their money back the next day. The problem is that the banks were using the loans to buy other loans. When those loans failed, they could not pay back their overnight lending.

The banks that gave out the money would then fail. So you had 2 banks failed to buy the same loan.

The way you stop TBTF is to not promote large interdependent banks and structures.