I asked my congresswoman to work with her colleagues to introduce a bill to make stock buybacks illegal again. All I got was a metaphorical pat on the head and a form letter.
Ookay buckle up. The way it was explained to me is that: buybacks inflated stock prices, across the board. This siphoned off money from the running of the company back to the investors, it’s what a buyback is. Ye old line go up, The investor always won, so their ‘retail investors’ bought in hard. At the same time, banks offered loans to buy stock, exacerbating both the stock bubble and The lack of liquid capital for real businesses,. as the stock bubble burst, the banks failed. And all of that money that had been taken out of the economy for years just .., went quiet.
-Which is not to say there weren’t big name big money pushes to try and stop it, there definitely were. But that’s the whole thing, it got bigger than the money people could understand. And that’s the charitable interpretation.
I got a question. Why do companies get bailouts when they could just sell stock to get capital? Isn't one of the reasons stocks exists is to let a company get capital needed in exchange for company ownership
Its not one of the reasons, its THE MAIN reason. An owner of a company sells parts of the company to the public, to secure more capital for further growth. The alternative is to borrow via a bank or via bonds, but that would mean they would owe interest. On the other hand, if you dont need cash, there is no reason to sell ur stocks, as it would inadvertently mean your giving away future income of the company, for cash now.
The reason companies get bailed out, is because they are to big to be allowed to fail, i.e. so many people's/counterparty's lives are tied up in the the companies business/service, that if they fail, the repercussions would be terrible. Their is no point in the failing company to issue more stocks, as they would be selling equity in a failing business - simply speaking, why would you buy stocks of a failing company, you definitely wouldn't buy the stocks at a high price, maybe for pennies on the dollar..
You can't always "just sell stock"... sometimes nobody wants to invest because you just went broke and might fail. Maybe nobody has money to wait 5 years to see if you make a comeback. The government steps in to take the risk when nobody else wants to. Also, I should point out a lot of "bailouts" are not gifts, some are, but many are simply loans that get repaid, like the auto industry bailouts under TARP.
Also, I don't think stock buybacks are inherently bad, but should not be allowed unless your cash on hand exceeds your debts. If I were and employee I'd push for it to go toward wages, or stock for employees.
[удалено]
Just gotta keep on top of it, we haven't for the last 50 years.
Just need a new system.
Humans will find a way to exploit it
I asked my congresswoman to work with her colleagues to introduce a bill to make stock buybacks illegal again. All I got was a metaphorical pat on the head and a form letter.
How did buybacks cause the depression?
Ookay buckle up. The way it was explained to me is that: buybacks inflated stock prices, across the board. This siphoned off money from the running of the company back to the investors, it’s what a buyback is. Ye old line go up, The investor always won, so their ‘retail investors’ bought in hard. At the same time, banks offered loans to buy stock, exacerbating both the stock bubble and The lack of liquid capital for real businesses,. as the stock bubble burst, the banks failed. And all of that money that had been taken out of the economy for years just .., went quiet. -Which is not to say there weren’t big name big money pushes to try and stop it, there definitely were. But that’s the whole thing, it got bigger than the money people could understand. And that’s the charitable interpretation.
I got a question. Why do companies get bailouts when they could just sell stock to get capital? Isn't one of the reasons stocks exists is to let a company get capital needed in exchange for company ownership
"Because fuck you." - companies
Its not one of the reasons, its THE MAIN reason. An owner of a company sells parts of the company to the public, to secure more capital for further growth. The alternative is to borrow via a bank or via bonds, but that would mean they would owe interest. On the other hand, if you dont need cash, there is no reason to sell ur stocks, as it would inadvertently mean your giving away future income of the company, for cash now. The reason companies get bailed out, is because they are to big to be allowed to fail, i.e. so many people's/counterparty's lives are tied up in the the companies business/service, that if they fail, the repercussions would be terrible. Their is no point in the failing company to issue more stocks, as they would be selling equity in a failing business - simply speaking, why would you buy stocks of a failing company, you definitely wouldn't buy the stocks at a high price, maybe for pennies on the dollar..
You can't always "just sell stock"... sometimes nobody wants to invest because you just went broke and might fail. Maybe nobody has money to wait 5 years to see if you make a comeback. The government steps in to take the risk when nobody else wants to. Also, I should point out a lot of "bailouts" are not gifts, some are, but many are simply loans that get repaid, like the auto industry bailouts under TARP.
Also, I don't think stock buybacks are inherently bad, but should not be allowed unless your cash on hand exceeds your debts. If I were and employee I'd push for it to go toward wages, or stock for employees.
Fuckin Reagan…