Prices not going down??

[Byrdman]

Originally Posted by slug

Stock buybacks are used when a company can’t find a productive home for money

Using money to invest in production implies that you see greater demand

The demand is not there... demographics

As a result you return the money to shareholders so that they may use this money

When a company is interested in paying back shareholders for unused or retained earning that are not needed, they should declare dividends, but that didn't happen. The money was used to buyback stock to overinflate the value of the company and enrich executives since most of their bonuses are paid with stock. To make matters worse, when they ran out of money, they issued debt to buy more stock. No way you are going to convince me that the stock market was valued properly with the DOW at 29,0000+ when a simple price-to-earnings ratio has shown different.

Preparing for a downturn by having cash on hand is a productive home for money. Also, re-tooling for greater efficiency for product delivery and investing in your workforce vs executive pay would seem to make your company stronger to weather the downturns like Ford vs the rest of the US automakers back in 2008.

How has that great return to shareholders been for the past 3 weeks. Almost all stock appreciation gains for the past 3+ years are gone, and no companies were announcing huge dividends to give back to the shareholder during that time.

As I mentioned before, the biggest elephant in the room may be the derivatives market. We really have no idea how much money was bet by Wall Street that the markets would stay healthy. We may be in for a much bigger surprise, but I hope not.

[rabbi]

Originally Posted by daletournier

How can they fix it again? genuine question.

They really have few tools left, we are already at zero interest rates, I mean really all they can do is print ,print and print, how does this not destroy the currency? Its just started and they have already allocated more funny money in a couple of weeks than they did through the whole 2008 crisis, I assume they'll start buying up the market next BUT is it even a market then? I also assume they'll start nationalizing corporations etc.

I should have written "cover the obvious problems" instead of "fix it".

They will just print because that is they can do in this situation.
Today's rescue programs are tomorrow's debt & inflation. And everybody knows that.

[Mike OReilly]

Originally Posted by rabbi

They will just print because that is they can do in this situation. Today's rescue programs are tomorrow's debt & inflation. And everybody knows that.

Logic says this can't go on indefinitely. But then economics often departs from logic .

Seriously though, how can this just keep going on, and on, and on. Does it all come crashing down when enough of us lose our faith, and see that the emperor has no clothes?

[Singularity]

Originally Posted by daletournier

...The US just announced its 2 trillion dollar package, it reminds me of the Jaws movie "we're going to need a bigger boat", and this things just getting started.

Some humor:

Congress Allocates $2 Trillion To Bail Out Struggling Bailout Industry

WASHINGTON—In order to alleviate the heavy damage the crucial financial sector is facing in the midst of the ongoing Covid-19 outbreak, the United States Congress announced Tuesday that they would be allocating $2 trillion in order to bail out the struggling bailout industry. “The bailout industry is on the brink of failure, so in order to prevent a full-on catastrophe, we are setting aside $2 trillion in order to bail it out,” said Senate...

[rabbi]

Originally Posted by Mike OReilly

Logic says this can't go on indefinitely. But then economics often departs from logic .

Seriously though, how can this just keep going on, and on, and on. Does it all come crashing down when enough of us lose our faith, and see that the emperor has no clothes?

Don't let logic get in the way. A debt crisis is best resolved by more debt. Everybody knows that


Actually it can (and probably will) work: You just have to add 10-20% inflation p.a. and wait a few years for everyone to pay his share...

No worries, that won't cause any riot on the streets because of the curfew

Well, I'll let smarter people than me figure out the details.

[CarinaPDX]

Originally Posted by Byrdman

When a company is interested in paying back shareholders for unused or retained earning that are not needed, they should declare dividends, but that didn't happen. The money was used to buyback stock to overinflate the value of the company and enrich executives since most of their bonuses are paid with stock. To make matters worse, when they ran out of money, they issued debt to buy more stock. No way you are going to convince me that the stock market was valued properly with the DOW at 29,0000+ when a simple price-to-earnings ratio has shown different.

Yep, that's right. And it is happening because the wealthy and corporate interests have paid Congress to create this unfair tax system. CEOs are mostly paid with stock options, not stock grants, and these are treated as having no value (no income tax is paid by the recipient at the time the options are granted). Then when they vest the recipient does a one-day purchase and sale, and either pays no tax (incentive stock options) or capital gains tax (because the options are held long enough). Since this is so favorable to the CEOs, they are highly motivated to push the stock prices up by buybacks instead of distributing dividends. Stockholders put up with it because for them paying taxes on capital gains is preferable to taxes on straight income. They shouldn't (assuming they have any say in the matter, which they don't). It is a tax system that actively incentivizes CEOs to put their companies at risk by over-leveraging, and puts far too much money in CEO pockets. Also, because these are options and not stock, if things turn bad (because of the high risk) management just walks away without losses.

I am not optimistic that the public will rise up and demand a fair system. But until we have a fair tax system and corporate governance we are going to continue to suffer.

Stay safe.

Greg

[wolfgal]

Originally Posted by Mike OReilly

Logic says this can't go on indefinitely. But then economics often departs from logic .

finally i find some company.


cards up: i'm worried to the moon and back, nervous too. i've been in lockdown way past my cabin-fever quota. seriously i'm ready to jump out of a window. i need sunshine, exercise, to talk to someone, to laugh. grief, this feels like a jail sentence (how i wish i had my boat: i'd be so outta here).

yes, i am in the capital. there are cops everywhere, and they are stopping people right and left 'controlling' them. fear permeates. we can only leave for an hour at a time now too, must put the hour and date on our permission slips that we print out from the govt website. most have a mask, so no one is smiling. people do not want to smile... and the silent eeriness of it all. spoke to an elderly widow on the phone. she was trembling, in tears, feared going out, so alone... she is isolated and terrified, but i am stuck here and cannot get there..., and couldn't anyway: i could kill her with my very presence (having been sick).

and so, my ability for logic is out the window. i need to talk:

i already mentioned how, for me, this virus outbreak allows for the already-coming economic collapse to be mitigated, controlled, soft-landed, etc... I agree with Dale and others: this is the perfect scapegoat. one pin and bubbles everywhere are beginning to deflate.

part of me says that all these bail outs is just a way for this printed money to buy up all these assets on the cheap. these assets are owned now: who owns them?

and injecting money into the system means that there is money to buy up popping bubbles, right? take, for instance, when the housing market begins to slump, these can be gobbled up for pennies to the dollar as well...

and then, foreclosures become rental properties... renting them can serve to inflate the price, so people who want to buy have to work longer and harder.

phase one, when the bubbles pop.

phase two: while the markets tumble and folks lose their jobs, more and more people are obliged to borrow (more) so to pay their bills. so more people having to work longer and harder.

phase three: inflation pays back the printed-save-the-day stuff through high prices. this too translates as: more hard work and for longer., for the people..

i might have cabin-fever... yes, perhaps, but there is more:

another part of me sees how cash, as in bills, is being villlanised: now it seems they "carry" the virus. synchronise that with the fact that folks are already talking about having atm limits and cash restrictions... and the question becomes: will the banks fold? will folks lose everything?

to me, all this points directly to a transition to a future CASHLESS system, one in which our purchases generate USEFUL DATA (how, where, when, and on what we spend), valuable info that can be sold to another company involved in surveillance capitalism...


another thought: universal income: not that i'm against helping folks (truly), but is this not the perfect solution for maintaining a swathe of deemed "useless-workers/useful-consumers" in a time when AI is putting these same folks out of work?

there are a few other things that have trotted across my forehead today... it has been a really, really rough day here. i never did read Orwell's 1984. always meant to, but honestly couldn't find the courage. now i find that, given the choice, i do not want to read it. i'd like to wake up tomorrow morning and feel the relief that comes when one realises it was only just a dream.


thanks guys, am glad for the listen

[CarinaPDX]

Wolfgal: so sorry to hear how hard this has been on you. One way or the other this will be over, hopefully sooner rather than later, so just hang on. It is difficult to be optimistic about the financial outcome, but let's not give up yet. This is all going to play back into politics around the world, and with a little bit of luck may actually result in a better world. It's not over until the fat lady sings...

Greg

[Wotname]

Originally Posted by Mike OReilly

.........

I also think there might be a lesson here for those of us in the rich, protected parts of the world. This might be the first time some of us actually feel -- vulnerable. Yet it is a life reality for most of the global population. Hopefully this will produce a lasting sense of empathy when we move forward beyond this health crisis.

I am nowhere near as optimistic as you Mike and I am normally an optimistic kind of guy.

Originally Posted by Mike OReilly

Logic says this can't go on indefinitely. But then economics often departs from logic .

Seriously though, how can this just keep going on, and on, and on. Does it all come crashing down when enough of us lose our faith, and see that the emperor has no clothes?

The emperor seems to have a shipload of distractions at his disposal to keep faithful fooled - sadly.

[Wotname]

For Wolfgal -

Just keep posting of CF until this storm passes; it will, all storms pass although some do cause serious damage to even well found ships.

If you are afloat when the calm comes, then all is OK.

[CarinaPDX]

Originally Posted by Wotname

The emperor seems to have a shipload of distractions at his disposal to keep faithful fooled - sadly.

I believe that Hans Christian Andersen story had the emperor deluded into believing he was wearing clothes - his subjects saw him naked. I wish that were the case here...

Greg

[Wotname]

Originally Posted by CarinaPDX

I believe that Hans Christian Andersen story had the emperor deluded into believing he was wearing clothes - his subjects saw him naked. I wish that were the case here...

Greg

Ah, yes - poorly alluded to by me; better said the emperor has a shipload of delusions...

[rabbi]

Originally Posted by wolfgal

to me, all this points directly to a transition to a future CASHLESS system, one in which our purchases generate USEFUL DATA (how, where, when, and on what we spend), valuable info that can be sold to another company involved in surveillance capitalism...

Cashless means you can not easily escape negative interest rates.
A nice way to keep the casino alive - just in case inflation doesn't work well enough.

Originally Posted by wolfgal

there are a few other things that have trotted across my forehead today... it has been a really, really rough day here. i never did read Orwell's 1984. always meant to, but honestly couldn't find the courage. now i find that, given the choice, i do not want to read it.

Since you have spare time you should read it.
It was a mandatory reading when I was in school (just like Brave New World and Animal Farm).


You will realize that we are already living Orwell's nightmare to some extend, but a bit smarter.

No need for the government to install "big brother" devices in every house like in 1984. We buy Alexa and Siri instead!

No need for the government to change newspapers, files & records in order to create alternative historical facts. Today we have the internet, a search engine monopoly and FB bots.

We are making these decision - either directly for ourselfs or indirectly by electing the wrong people.

[rabbi]

Originally Posted by CarinaPDX

I believe that Hans Christian Andersen story had the emperor deluded into believing he was wearing clothes - his subjects saw him naked. I wish that were the case here...

Greg

Taking this out of context it reads like you want to see that yellow haired guy naked !
Strange fetish... Fifty shades of yellow

[CarinaPDX]

Originally Posted by rabbi

Taking this out of context it reads like you want to see that yellow haired guy naked !
Strange fetish... Fifty shades of yellow

It's called a metaphor. I would like everyone to see him as he really is, and not share his delusion.

Actually naked? Ewwww. That is a disturbing image. I'm sure Stormy will never be able to forget.

Greg