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"What about the stock market? It has been down in recent days but is still high historically. Isn’t the stock market evidence of a good economy? Not if stocks are up because corporations are buying back their own stock. Corporations are now the largest buyers of stocks. Recently we learned that from 2006 through 2013 corporations authorized $4.14 trillion in buybacks of their publicly traded stocks. Moreover, it appears that corporations have been borrowing the money from banks with which to buy back their stocks."
Dr. Paul Craig Roberts
"Borrowing to buyback stock leaves a company with debt but without new investment with which to produce revenues to service the debt. The massive stock buybacks demonstrate that American capitalism is now corrupt. In order to maximize personal short-term financial benefits flowing from bonuses, stock options, and capital gains, CEOs, boards of directors, and shareholders are decapitalizing public companies and loading them up with debt."
Dr. Paul Craig Roberts
Here is Max Keiser explaining the same thing. It's a bubble based on fraud.
"What about the stock market? It has been down in recent days but is still high historically. Isn’t the stock market evidence of a good economy? Not if stocks are up because corporations are buying back their own stock. Corporations are now the largest buyers of stocks. Recently we learned that from 2006 through 2013 corporations authorized $4.14 trillion in buybacks of their publicly traded stocks. Moreover, it appears that corporations have been borrowing the money from banks with which to buy back their stocks."
Dr. Paul Craig Roberts
"Borrowing to buyback stock leaves a company with debt but without new investment with which to produce revenues to service the debt. The massive stock buybacks demonstrate that American capitalism is now corrupt. In order to maximize personal short-term financial benefits flowing from bonuses, stock options, and capital gains, CEOs, boards of directors, and shareholders are decapitalizing public companies and loading them up with debt."
Dr. Paul Craig Roberts
Here is Max Keiser explaining the same thing. It's a bubble based on fraud.
I don't necessarily disagree. But what practical suggestions do you have? The only thing I can think of is getting off the money system entirely and being as self sufficient as possible. But that's easier said than done. Most people don't have the skills for it, and I suspect (can't prove it, haven't looked into it deeply enough) the legal system discourages rural, self sufficient living in a number of subtle & overt ways....I don't think it's an accident that the family farm has largely disappeared.
I had not realized that reason for the highly overvalued market running over 16,000. I may be time to take my capital and put it into a sock.
FWIW - This might also explain why so many people are buying classic cars for 60 to 200 thousand dollars each instead of putting the money into the market.
These types of threads are instructional if for no other reason than their support of the notion that something is terribly wrong in the US financial system, it isn't that most people don't know that, but the mechanics of the scheming, lying, law defying, business as usual mentality that dominates Wall street is often defended as "capitalism" at work and therefore beyond reproach. This is the dream of Ayn Rand gone bad. Unrestricted capitalism is every bit as bad as any Russian communism or Central American statist economy.
For every Paul Roberts there's probably two others who will defend to the death the notion that our financial system is "the best one going,"or "it's doing just fine and has been for years", they see these inconsistencies and lies as the exception and not the rule. The other component in the present system that doesn't get the press it deserves is the fact that these quasi criminal acts are part and parcel of why the "market" is so lucrative for those willing to take the risks most often associated with the "best return". That best return is found in the lawlessness of the sub prime securities ratings schemes, or if they are among those who have paid the politicians for a change in old laws that now make the illegal---Legal.
Any of the economic isms found around the globe have these aspects of corruption to them for the simple reason that men are greedy and selfish, and some men who seek power and wealth are greedy beyond any comprehension. The only system that can possibly endure is one that relies heavily upon a strong construct of laws, and the logical follow on to that would be a strong government to provide the consequences for breaking those laws. Look around you today, the propagandists are preaching an opposite remedy of weaker government while advocating for a policy of self policing in the financial sector.
Power is the force and money is the power, so, the tragedy of human greed will be played out to a logical conclusion, and that conclusion would be the realization of our collective failure to achieve a true (balance of power) democracy. On that note I'd have to say we are a long way from understanding the American financial/political system and thus making any real changes to it. Until the average American can see our economy as an entity made up from the political/financial interests of those who benefit from it the most we'll continue to treat the "market" and "government" as two distinct subjects for debate, and that will play into a positive for those who manipulate both...
I don't necessarily disagree. But what practical suggestions do you have? The only thing I can think of is getting off the money system entirely and being as self sufficient as possible. But that's easier said than done. Most people don't have the skills for it, and I suspect (can't prove it, haven't looked into it deeply enough) the legal system discourages rural, self sufficient living in a number of subtle & overt ways....I don't think it's an accident that the family farm has largely disappeared.
During the Clinton administration there was a move to put a much higher tax rate on salaries over 1 million dollars. To get around this boards of directors of many companies opted to pay CEO's and other high ranking employees with stock options which would not be subject to the tax. You know most financial advisors will tell you that an important rule is to "pay yourself first" - meaning put some money in savings before dealing with all your expenses but I guess the boards and CEOs had a different understanding of the concept and decided that if they could keep the value of the stock high by any means necessary they would make more money without having to actually improve the products or services that the company sold.
During the Clinton administration there was a move to put a much higher tax rate on salaries over 1 million dollars. To get around this boards of directors of many companies opted to pay CEO's and other high ranking employees with stock options which would not be subject to the tax. You know most financial advisors will tell you that an important rule is to "pay yourself first" - meaning put some money in savings before dealing with all your expenses but I guess the boards and CEOs had a different understanding of the concept and decided that if they could keep the value of the stock high by any means necessary they would make more money without having to actually improve the products or services that the company sold.
Ah, the rule of unintended consequences.
I agree with the gist of what you're saying except for the fact that none of it is "unintended". Please, don't kid yourself.
I don't necessarily disagree. But what practical suggestions do you have? The only thing I can think of is getting off the money system entirely and being as self sufficient as possible. But that's easier said than done. Most people don't have the skills for it, and I suspect (can't prove it, haven't looked into it deeply enough) the legal system discourages rural, self sufficient living in a number of subtle & overt ways....I don't think it's an accident that the family farm has largely disappeared.
Avoid debt (either as a borrower or as a lender for anything except the short term), and if domestic stock is overvalued then invest overseas!
I am just happy that this information is becoming mainstream and when I talk to others they react differently than 25 years ago when I first realized how the economy actually works.
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