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You could apply this with slightly different specifics to many US national and multinational corporations. The efficient market rewards inefficient stock buyba
by formerkrogemp 4y ago
You could apply this with slightly different specifics to many US national and multinational corporations.
The efficient market rewards inefficient stock buybacks, record debt fueled dividends, years of underinvestment, low wages, and most of all no strings attached bailouts. They may be a loser, but we'll pay for their loss. Socialize the losses/costs and privatize the gains.
- lotsofpulp 4y agoBased on the performance of publicly listed companies in the last 15 years, the stock market has rewarded companies with great cash flow, high profits, and relatively rosy outlooks. Of course there is an underlying assumption the government will bail out simultaneous/systemic big failures, but it does not seem accurate to assume any random business will be bailed out. Edit : fixed typo
- PaulDavisThe1st 4y ago> but it does it [sic] seem accurate to assume any random business will be bailed out. Precisely the issue. It's not "any random business". It's any business with the appropriate properties and connections. If it was truly just random business, perhaps the bail outs would not create such a level of moral hazard. But it's not, and businesses know that.
- megaman821 4y agoI don't like the bailout but I understand they were necessary. I just wish they came with harsher deterrents. Like if the shareholders vote to take a bailout, the Board, C-Suite, and VP's all get let go and any financial packages can be litigated in special bailout courts.