81–90 of 122 posts
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"Barack Obama says banks paid back all the federal bailout money" https://www.politifact.com/factchecks/2012/oct/25/barack-oba...
Opportunity cost, the banks in no way payed out what that money was worth at the time. Hand me 1 billion interest free for 5 years and sure I will pay the money back, but...
Btw most of these shareholders have been smart enough to sell immediately when the markets began falling so they will buy these stocks at the bottom and get bailed out all over again by the taxpayer and watch the capital multiply. I'm all for getting rich but pump and dumps should be (are?) illegal.
If they're bailed out the government should take over the stock and if they survive the government can recoup the money it cost to bail them out by selling stock again. It's how it works in most countries at least.
Wiki says: > free cash flow to firm (FCFF) is a way of looking at a business's cash flow to see what is available for distribution among all the securities holders of a corporate entity. [0] What do people expect them to do with free cash flow? The point of free cash flow is to get the money back to shareholders. These aren't high-growth industries. [0] https://en.wikipedia.org/wiki/Free_cash_flow
Pay employees more, increase benefits, better service for customers, put money away for a rainy day? There are lots of ways to spend money that are good for the long term rather than making the rich richer.
Btw most of these shareholders have been smart enough to sell immediately when the markets began falling so they will buy these stocks at the bottom and get bailed out all over again by the taxpayer and watch the capital multiply. I'm all for getting rich but pump and dumps should be (are?) illegal.
Company is worth $100, has 100 shares. You own 1 share, worth $1.
Company takes $100 from Gov't, not a handout but rather in exchange for stock. Now it's worth $200, there are 200 shares, 100 owned by the government, 99 by other shareholders and 1 by you.
In this situation, you're back where you started.
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Capitalize profits socialize losses that is American corporate way. Executives keep the profit and expect taxpayers to bailout losses.
"Barack Obama says banks paid back all the federal bailout money" https://www.politifact.com/factchecks/2012/oct/25/barack-oba...
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> Btw most of these shareholders have been smart enough to sell immediately when the markets began falling so they will buy these stocks at the bottom and get bailed out all over again by the taxpayer and watch the capital multiply. If they sold, then they're no longer shareholders; there are new shareholders, and they will be the ones to receive any potential bailout. There's two sides to every transaction. If peopl…
Ah if only that was the case. Turns out, when the government is involved then the taxpayer is buying but the government is deciding what to buy. There is no hedge fund buying airlines right now. There will be a shitload of them lining up once the government commits to buying the debt because then they know there's only upside from there.
(Ignoring, for the moment, that bailouts generally zero out equity holders to ensure debt holders get paid.)
Your cynicism is healthy, but I'm not sure you understand how this process works.
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Apple has done more buybacks than anyone! And pays a dividend. > Since 2012, Apple has been buying back shares at the extraordinary rate of around $10 billion per quarter. Shareholders demanded it.
Apple has gigantic amounts of free cash flow, which is why they have $100 billion of cash on their balance sheet, despite their buybacks.
Apple keeps a massive cash hoard in case they want to do a very large strategic acquisition. Airlines would be doing mergers not acquisitions.
IMO it’s entirely appropriate that if a black swan even cripples an industry like air travel for a government to offer low-interest loans until they can start generating cash again.
This is actually significantly more efficient than each company having to put billions of capital on the sidelines “just in case” their entire multi-billion dollar revenue stream goes to $0 for a few months. Capital efficiency is very important to overall economic growth.
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We’re talking about airlines, not Boeing. How much R&D should they be doing?
You mean they couldn’t be doing R&D into better flight paths for fuel economy or risk? What about finding ways to better transact with the end client? Or a better way to deal with cargo? How’s about research into a machine to better load cargo into the plane? What type of question is this?
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Pay employees more, increase benefits, better service for customers, put money away for a rainy day? There are lots of ways to spend money that are good for the long term rather than making the rich richer.
Public companies aim to maximise shareholder value, however in competitive markets that usually involves improving service, having a happy workforce (higher benefits) so it all works. And putting money away for a rainy day will never be as beneficial for companies as for individuals.
I think what's frustrating for me is that under these circumstances, there will be a lot of individuals and small businesses that will go under because they didn't save enough for a rainy day, but if your big enough, we have to save you.
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Dividends and share buybacks are economically equivalent, the only difference is tax efficiency.
No, they aren’t. Buybacks push stock price higher, which also makes a difference for option values in a way that dividend don’t. Also, they are efficient in that they defer the taxation to the point of share sale, but they are inefficient in that holding a stock for less than a year in the US taxes them at the much higher short-term capital gains rate. Furthermore, the dividend is cash, it cannot go to zero without g…
My theory is that buybacks give companies a false sense of complacency. If they do $1 billion worth of buybacks, it doesn’t feel they are really “giving out” $1 billion back to investors. Rather, $1 billion in cash just got converted to a long term asset(their shares). Thus this is how airlines get into a cash crunch. They are lulled to believe they can go crazy with buybacks with no consequences.
If instead they did a special dividend for $1 billion, they would immediately feel the consequences. It is money taken straight out of their bank. Thus they would of course consider more carefully how much to give as a dividend.
Just my theory and why I am against buybacks and for dividends only.