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The Case For Super Glass-Steagall
February Stock Buybacks Hit Record - Total $2 Trillion Since 2009
Corporate America’s love affair with itself grows more passionate by the month.
Stock buybacks, which along with dividends eat up sums of money equal to almost all the Standard & Poor’s 500 Index’s earnings, vaulted to a record in February, with chief executive officers announcing $104.3 billion in planned repurchases. That’s the most since TrimTabs Investment Research began tracking the data in 1995 and almost twice the $55 billion bought a year earlier.
Even with 10-year Treasury yields holding below 2.1 percent, economic growth trailing forecasts and earnings estimates deteriorating, the stock market snapped back last month as companies announced an average of more than $5 billion in buybacks each day.
. . . “Companies that are earning a lot of money and generating cash are borrowing money at basically zero rates and buying back,” said Neil Grossman, the St. Petersburg, Florida-based chief investment officer at Tkng Capital Partners. “From an investor’s standpoint, you want the highest return on your dollar, period. If the highest return comes not from growing your business but buying your shares back, that’s fine.”
. . . Companies in the S&P 500 have spent more than $2 trillion on their own stock since 2009, underpinning an equity rally in which the index has more than tripled.
. . . (Comment: Schri - Corporate stock buybacks is only half the story...the other half is the collapsed corporate tax collections (as a % of their earnings) under Bush (jr) and now even more so under Obama. This is another couple of trillion handed to corporations vs. the previous % of taxation corporations paid (now about 20% vs. 50 yr average of 40%). http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-35-taxes.html
Gitmo in Chicago
Inverted totalitarian? It's certainly descriptive.
Confronting the centers of power?
So Chris Hedges, who wrote Death of the Liberal Class, says.
Chris was featured on LINK TV at the "Santa Fe Retreat on Occupy," holding an in-depth discussion of almost everything we'd like to know more about as well as many other important subjects that inform his audience (and us) immeasurably.
From the Link TV website:
As an icon of the Occupy movement, journalist Chris Hedges has been willing to face arrest and ridicule to stand up for what he believes in. He has even gone as far as suing the Obama administration over part of the National Defense Authorization Act (NDAA) that allowed indefinite detention of US citizens. We caught up with the Pulitzer Prize-winning author during the Truthdig Santa Fe Retreat hosted by our friends at Truthdig.com on May 22, 2012. In this moving talk, Hedges takes us through history to show the calculated destruction of what was the Liberal Class. He advocates for a new movement to be born, one that revolts against the unfettered capitalism that he says is destroying our world. It is a passionate plea for a new American revolution.
After almost 25 years of a solid, impeccable professional work life, I found I could not be hired by almost anyone as I was no longer qualified to hold a job. What a surprise. But it was not only I. It's been a long-term disease in America since the 90's easily (that many people fear to go into too deeply psychologically because it spelled the end of the dream of democracy).
I fear for Chris Hedges who has no fear.
From Postcard from the End of America:
The most insidious abuse of power, was how employees were discarded, “In the bar and restaurant business, they will overhire, then get rid of whoever they don’t like, but without firing them. If they find someone that they like more than you, they’ll keep it hush hush and find ways to push you out, and they will do this with any position. It’s not just with a server or kitchen worker, they will also do this with a manager.
They do not want to give fired employees unemployment. They will find any way of going around paying people unemployment. So if they want to do a mass firing, they’ll cut people’s schedules. They’ll cut their hours. For people they want to get rid of, they’ll just give them one or two shifts a week. This usually forces people to quit, because they’re so broke. This way, they don’t have to fire ten people and pay unemployment.”
Long time employees also expect periodic raises, so by forcing them out, owners save money.
It’s very passive aggressive, these tactics, “They will give you the shittiest shifts or they can cite you for every little mistake, every little thing that you do that they can make into an issue. What they did to me was, they’d suddenly email me and say, ‘You’re not in charge of that anymore. Why don’t you do this,’ then they’d give me these very childish tasks, these very boring tasks, and I was like, ‘Why am I doing this if I’m the manager?’
They’d email me and say, ‘Oh, you don’t have to come in today.’ They phrased it in such a way that you’re like, am I being rewarded with some time off? They kind of fucked with your head a little bit, so you’d think, maybe I’m being rewarded here, but at the end of the month, you’re like, holy shit, I hardly worked at all. So they push you off. Holy shit, you know, they basically fired me, but they didn’t do it outright, but only in the most passive aggressive way.”
Nasdaq 5,000 Is Different This Time . . . But Not In A Good Way!
David Stockman
March 3, 2015
The robo-traders and Wall Street punters were busy painting the tape yesterday, and did bump the Nasdaq composite across the magic 5,000 threshold for the first time since March 2000. But even as Wall Street urged home-gamers to “return with us to the thrilling days of yesteryear”, the caveats about this time is different were flowing with abundance:
This time, the Nasdaq at 5,000 is underpinned by substantial companies with strong sales and credible plans for growth, not wishful schemes to “monetize eyeballs” and sell pet food online.
Not exactly. This time is very different, but, as they say, not in a good way. Not even close. Since the two days of March 9 and 10 in the year 2000 when the Nasdaq closed over the 5,000, the financial markets have been converted into central bank managed gambling halls and the global economy has bloated beyond recognition by 15 years of non-stop financial repression.
Back then, a few hundred stocks were wildly over-valued based on monetizing eyeballs; now the entire market is drastically overvalued owing to the false financial market liquidity generated by $14 trillion of central bank asset monetization — mostly public debt— since the turn of the century.
As a result, the global financial system and economy are orders of magnitude more fragile and vulnerable to collapse then they were 15 years ago. Indeed, nearly all of the tail winds which managed to quickly revive markets and economic growth after the dotcom crash have now played out, and, if anything, will morph into stiff headwinds in the period immediately ahead.
For better or worse, for example, China proved to be a powerful tailwind after the turn of the century. It functioned as an enormous global locomotive that generated hyper-growth in the energy and resource industries; and which also ignited a supplier boom in a whole variety of EM industries from Brazil’s soybean and iron ore sectors to shipbuilding and semiconductor production in South Korea.
Yet this was accomplished not through healthy, balanced, market-driven investment and enterprise, but through the most spectacular credit bubble in human history. At the end of the year 2000, China’s debt was about $2 trillion and its GDP was about the same. By contrast, today its credit market debt outstanding is about $28 trillion or 14X greater, according to McKinsey’s research. Notionally its GDP is up by 5X to about $10 trillion, but that doesn’t really mitigate the debt explosion.
That’s because China’s GDP growth was a force draft concoction of state directed credit spending that resulted in massive waste and unproductive investment. Rather than catalyze permanent gains in wealth and sustainable output, its erected a phony hothouse economy which will inexorably implode and crater. So doing, China’s imminent collapse will drive powerful waves of global deflation as its demand for iron ore, coal, petroleum, alumina, copper, manufactured components and intermediates and shipping and distribution services falters.
In short, the world economy is drastically overbuilt owing to the “China bid” for materials and supplies — meaning that what had been a source of extraordinary profits and margin expansion in the world materials and industrial economy will become a sledgehammer on prices, margins and profits in the years ahead. At the peak in 2012-2013, upwards of 23% of S&P profits were attributable to energy and materials. But the China deflation now gaining a head of steam will vaporize these bloated profits in the years ahead, taking a huge bit out of aggregate corporate earnings.
Or take the hapless case of Europe. At the turn of the century, the single currency was an economic supernova just beginning its eruption. As is now evident, Germany’s credit rating was being seconded to inefficient, corruption-ridden welfare states all over the continent, but especially on the periphery. And for the first decade, the resulting one-time explosion of public and private credit generated by that false credit transfer did wonders for the reported GDP numbers and the profits of global corporations that answered the EU demand call.
It was a tailwind on steroids. But as is evident from the three charts below, the one-time credit boom that accompanied the euro is over and done. Public and private debt carrying capacity is tapped out. Consequently, eurozone growth hit a peak in 2008 and has flat-lined ever since. Now Europe’s traditional welfare state and dirigisme headwinds to economic growth will be compounded by an endless struggle of aging, uncompetitive economies with peak debt.
See the charts and the entire essay here.
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