101–110 of 220 posts
Earlier quoted context omitted.
It's not "stealing" from the market. All it does is increase the value of each share in proportion.
It's not stealing from the market, but it's essentially giving away money to shareholders by spending to inflate the stock price. In a way it's similar to dividends, but not taxes in the same way. Basically the logic behind the French government reasoning is "we're giving you money to support your business and your employees, not to give it away to shareholders". Note that this wasn't the initial plan of the French g…
The real beneficiaries of buybacks are executives and employees with vested stocks. They both lose money on dividends and directly benefit from the contraction in available shares.
.. or dividends as the article says. Devil is in the details. Maybe French government has good conditions for the aid, but the article is not giving details. Aid should be exchangeable debt for public companies. No dividends and buybacks. No executive bonuses or options until the debt is paid full. After (5-7) years the remaining debt is exchanged into company stocks in a rate that leaves the government in the neutra…
Presumably companies with strong finances and other options for financing would not want to take on shareholder-unfriendly terms like a multi-year ban on paying dividends or doing buybacks.
Earlier quoted context omitted.
Your company makes 2 million profit per month. You don't want to sit on the cash for 12 months just to pay out 24 million, you want to give the money to shareholders immediately. That's a pure liquidity problem so the answer is to just get a dirt cheap loan.
In a year's time, weirdly there isn't 24 million cash profit to pay off the "cheap loan" and the company go bankrupt. In hindsight it's obvious the "profit" was illusionary. Your million dollar "performance" pay for orchestrating this is securely in your personal bank account, the auditor's million dollar "consultancy fee" in theirs, and employees, the tax man, and shareholders are left with nothing. Yet another "suc…
.. or dividends as the article says. Devil is in the details. Maybe French government has good conditions for the aid, but the article is not giving details. Aid should be exchangeable debt for public companies. No dividends and buybacks. No executive bonuses or options until the debt is paid full. After (5-7) years the remaining debt is exchanged into company stocks in a rate that leaves the government in the neutra…
That still has the perverse incentive of gambling with other people’s money.
Perhaps a better approach would be to require these companies to maintain capital ratios like we do for banks. They could be forced to raise more equity if their debt becomes too large. After all the point should be to prevent them from needing future bailouts. I mean there are other ways to extract money from a company than paying dividends or doing share buy backs. Are they also going to cap salaries for employees?…
Earlier quoted context omitted.
Why aren't we letting them fail instead of allowing these idiots to stay in business? Say American Airlines went bust. It's debtors would get its planes and other company assets, who would then in turn sell them to other airlines. A new airline might form to take its place, which would probably be a little more prudent than the last one.
In some indistries, that means thousands of people without work, and hundreds of other companies in the supply chain going bankrupt, and even more people without work. Sometimes it's cheaper to bail out the main company, then to deal with the unemployed, many more bankrupt companies etc. But some regulation should be put in place... if a CEO fscked up the company so much, it needed government bailout, they don't dese…
Earlier quoted context omitted.
Why aren't we letting them fail instead of allowing these idiots to stay in business? Say American Airlines went bust. It's debtors would get its planes and other company assets, who would then in turn sell them to other airlines. A new airline might form to take its place, which would probably be a little more prudent than the last one.
In some indistries, that means thousands of people without work, and hundreds of other companies in the supply chain going bankrupt, and even more people without work. Sometimes it's cheaper to bail out the main company, then to deal with the unemployed, many more bankrupt companies etc. But some regulation should be put in place... if a CEO fscked up the company so much, it needed government bailout, they don't dese…
What the CEO really is, is a marionette for the shareholders. That's why all the CEOs act in the same way and that's why they always get their bonuses. Also they got lots of bonuses in the previous year for running these schemes.
Why aren't shareholders on the hook for bailing out their own companies? They have the financial incentive to protect their own investments. Why is bailing out a compay different from "investing" in it? What is an investment besides a non-emergency bailout? Edit: Why don't companies raise money by issuing more stock? Isn't that what the stock matket is for?
Investing is privatizing the risks and the benefits. Bailing out is privatizing the benefits but mutualizing the risks. It's taking what favors you from both capitalism and socialism, call that a free market, and pretend it's for the common good. You always win. People says communism didn't work looking at Russia and China. But the ruling class will abuse any system to the point it doesn't look like the original idea…