Robert Reich

Corporations aren’t even plowing their extra profits into new investments that would generate higher productivity in the future. They’re buying back their shares to boost stock prices.

Through the end of last year, American firms announced stock buybacks exceeding $1 trillion.

Jan 27, 2023 at 6:44pmWeb
Show threadcryo2go :unverified:Jan 27, 2023
@rbreich are last years numbers inflated b/c corporations are trying to get ahead of the new (good but tiny) excise tax in 2023??
Show threadGurtbeef RobeJan 27, 2023
@BenjaminHimes @rbreich I understand why they sell stock if they need to raise $ but is there a legitimate excuse for buybacks other than to inflate the stocks? Seems like it should be illegal if that’s the only purpose
Show threadcryo2go :unverified:Jan 27, 2023

@twitterreject @rbreich I could be wrong, but ultimately it will still get taxed as long tern cap gains as an increase on the shareholders basis.

But where it gets shady is the distinction between buybacks and cash re-invested in the business, which is supposed to be limited to "reasonable" amounts needed for "well-defined" future capital improvements needed for a business to grow.

Not sure what the justification for buybacks is then?

Show threadGurtbeef RobeJan 27, 2023
@BenjaminHimes @rbreich yeah I don’t know what their justification is on buybacks. I can see a need for selling stock to get capital but I don’t see any other purpose for buybacks besides to up stock value. But then it’s no longer about the business profits but rather a financial manipulation. If that’s the case, then our Corp system is double shit. 1. For top priority of maximizing profits over everything and 2. For buybacks being part of it
Show threadGurtbeef RobeJan 27, 2023
@rbreich this is becoming a major problem and needs to be banned with major fines for any company that does this more than 1x under the same ceo.
Show threadStephen JeromeJan 27, 2023

@rbreich

So much for most corporations feeling that they have to show some sort of corporate responsibility to ensure that their workers are cared for and that their clients/customers continue to receive a quality product. It is all about the shareholders, profit for profit's sake.

Show threadCoyotyJan 27, 2023
@rbreich They're consuming their own reserves until they're too weak to save themselves. "Cutting the fat" is economic anorexia. The fat is where the energy comes from.
Show threadFaye Loves GodzillaJan 27, 2023
@rbreich one big smash and grab.
Show threadEmeritus Prof Christopher MayJan 27, 2023
@rbreich I've always throught share-buy-backs were a key indicator that #management is only concerned with their own enrichment, and more importantly has no interest nor idea about how the #corporation should move forward.... its a sign of capitalist decadence!
Show threadLeslie LieuranceJan 27, 2023
@rbreich Great if you own the stocks, not so if you're buying gasoline.
Show threadPorter WoodwardJan 27, 2023

@rbreich see the story at Chartr

https://www.chartr.co/stories/2023-01-27-2-companies-have-become-stock-buyback-machines

Buybacks: Corporate share repurchases are bigger than ever

Visual insights that go beyond the headlines, from Chartr's newsletter published on Jan 27, 2023. Buybacks: Corporate share repurchases are bigger than ever.

Show threadPeter LeonJan 27, 2023
@rbreich Corporations have been buying back their stock since the Trump Tax Cuts, instead of rewarding shareholders with dividends or the country with new investments. That’s the GOP way: line your own pockets.
Show threadMidwest BobJan 27, 2023
@rbreich “Greed is good,” said Gordon. And the business schools swelled with MBA applicants. We see the results now in corporate America.
Show threadmikedtJan 28, 2023
@rbreich when all the exec bonuses are based on stock price then you’ll get actions that boost short term stock prices. Predictable outcome.
Show threadMike HJan 28, 2023

@rbreich

Just backing it up

https://www.bloomberg.com/news/articles/2023-01-09/corporate-america-is-still-lining-up-to-buy-back-its-own-stock-shares