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The Stock Market Is Disappearing In One Giant Leveraged Buyout

Tyler Durden's picture




 

Submitted by Daniel Drew of Dark Bid

 The Stock Market Is Disappearing In One Giant Leveraged Buyout

It's easy to find critics and doomsayers who predict that the next stock market crash is just around the corner. They could be right, but another possibility is that the stock market itself will disappear entirely.

Anyone who is familiar with mergers and acquisitions knows what happens when a company is being slowly acquired. The price climbs higher, slowly yet relentlessly. Liquidity evaporates as offers are lifted. If the price moves up too quickly, buy programs are canceled. The buyer waits until the froth dies down a little before resuming purchases. Eventually, the bids reappear, and the process continues. Once the buyer acquires 5% of the company, a legal requirement is triggered: the SEC requires the buyer to file Schedule 13D, otherwise known as a "beneficial ownership report." Once this report is filed, everyone can see the buyer, and the stock price will usually jump.

This same process has been underway in the stock market over the last 6 years. The market is up well over 200%. Liquidity has evaporated in the S&P 500 futures market, and the central banks themselves are buying S&P 500 futures. Companies are spending nearly all of their profits on stock buybacks. Just recently, Wendy's announced they would buy back half of their stock.

All of this activity harms employees. William Lazonick discussed the negative effects in a Harvard Business Review article called "Profits Without Prosperity." According to Lazonick, the American economy has transformed from a system of value creation to one of value extraction. He explained,

From the end of World War II until the late 1970s, a retain-and-reinvest approach to resource allocation prevailed at major U.S. corporations. They retained earnings and reinvested them in increasing their capabilities, first and foremost in the employees who helped make firms more competitive. They provided workers with higher incomes and greater job security, thus contributing to equitable, stable economic growth - what I call "sustainable prosperity."

This pattern began to break down in the late 1970s, giving way to a downsize-and-distribute regime of reducing costs and then distributing the freed-up cash to financial interests, particularly shareholders. By favoring value extraction over value creation, this approach has contributed to employment instability and income inequality.

The private takeover of the stock market is also apparent in the IPO market, or lack thereof. Rett Wallace said in Forbes,

U.S. technology companies have already raised more money this year in the private market than in the public market in all of 2014 (excluding Alibaba's nearly $22 billion IPO, which is by any definition an outlier). The 25 tech IPOs in 2014 (again excluding Alibaba) raised a total of $6.5 billion, less than the $7.8 billion already raised privately by US tech companies this year.

This is the end game of unfettered capitalism. The signs are all here. When you cast aside reasonable restraints, the unscrupulous among us will rise to the top and exploit everyone else. What we have left is a new American feudalism where CEOs move around like a pack of ruthless Somalian warlords. Riding behind the banner of efficiency, they replace employees with robots, outsource their work to foreigners and tell their employees to train their own replacements, and collude with hedge fund managers to strip companies of their most valuable assets to temporarily boost the stock price.

As if all this weren't enough, now they are buying the entire stock market with money provided by the Federal Reserve's quantitative easing policies. This is essentially the largest leveraged buyout in history, and it's being paid for by every American. If the IPO market continues to dry up and companies maintain their buybacks, eventually, they will run out of stock to buy, and the market will disappear.

In a country without public markets, corporate fiefdoms will dominate the landscape. Instead of actual castles and moats, fiefdoms will have legal barriers to protect them, like low minimum wages, tax loopholes, and regulatory capture. Warren Buffett always said he likes businesses with "economic moats." Just imagine how much he would like the moats of the new American feudalism.

The company that best epitomizes the increasing privatization of capital is Uber. With absurd valuations in the private market as high as $50 billion, the company already has a substantial fiefdom. One day in the future, when the private takeover of all public markets is complete, you will see a propaganda poster on the subway that says, "We are all Uber drivers now!"

 

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Fri, 06/05/2015 - 08:39 | 6166155 thinair
thinair's picture

There are ten people and resources to feed only nine. What happens to the tenth and why? O’ Humanity, Why are you running and for what? Is anyone on this planet trying to solve this problem?

I am working on it because if everyone will be a bystander when who will fight?

 http://just-a-thought-from-thinair.blogspot.com/

Read the post titled “No one saw it coming”

 

Thanks zerohedge for all the good work you do!

Fri, 06/05/2015 - 08:56 | 6166205 PrimalScream
PrimalScream's picture

AFTER the Soviet Union fell, the country was the victim of TWO very bad trends:

1.  Many rich people and factory managers plundered the nation's wealth and took it overseas for themselves.  A LOT of that wealth NEVER returned to Russia! Period.  It never went back.  Even today, there are rich ex-Russians sitting around in cafes in Europe drinking champagne from wine glasses that contain uncut diamonds.

2.  The country got taken over by a bunch of billionaire-Oligarchs who were constantly running their own fiefdoms and warring with each other.

TODAY the USA is facing exactly the same set of risks.  No different!  A major collapse in the US economy will result in both trends taking place.  You can already see the early warning signs today. 

Fri, 06/05/2015 - 09:05 | 6166260 all-priced-in
all-priced-in's picture

Companies feel they must grow - or they will shrink and end up dead.

 

Company I worked for had an acquisitions department - all it did was evaluate should we buy XYZ or not? - I worked in it for a year.

 

The CEO demand  was to grow at least 5% per year - but the goal was 10%.

 

It is damn hard to grow old established businesses 10% -

If you are not growing you are as good as dead -

Sales growth allows you to make mistakes and still survive - everyone makes mistakes

Growth allows you to pay people more and offer better benefits

Growth allows you to provide opportunity to people

 

 

Bla bla bla

 

You can slam perpetual growth - I get that - but the truth is if your sales stay flat for a few years your profits start to slip - you can't give people a raise - you start to lose your best and brightest - staying the same just doesn't work for most business models -

 

I assume the folks that think you can somehow set up a sustainable business that never grows will disagree - but I doubt any of these people have ever actually been in charge of a company.

 

If someone does know of a way to keep growing payroll (giving people a raise)  and providing challenging opportunities for your employees - while  your sales don't grow  please give me a hint at how you do it - because I have not figured it out.

 

Fri, 06/05/2015 - 09:21 | 6166335 Mike Honcho
Mike Honcho's picture

Agree, but your assessment seems extreme.  Think more of a smaller company.  They aren't in the acquisition phase like the big boys.  Any sales sage knows there are fluctuations and base their yearly salary accordingly.

I think you are addressing larger companies that face a different level of function and competition.

Fri, 06/05/2015 - 09:51 | 6166440 all-priced-in
all-priced-in's picture

Sure - the article is about large companies buying up everything they can.  

 

But every small business owner want to see sales growth.  They just can't go on an acquisition bing using their stock and borrowed money to buy up other companies.  

 

 

Fri, 06/05/2015 - 09:28 | 6166359 Uchtdorf
Uchtdorf's picture

It's called Continuous Improvement. Eliminate waste. Every company has waste. Get rid of any obstacles that block productivity, both on the plant floor and in the office, including the CEO's swanky suite.

By destroying normalcy bias and making excellence the goal of everyone, companies can continue a healthy growth pattern without necessarily opening a 100 new frozen yoghurt shops on every street corner in town.

I know, I know...easier said than done.

Fri, 06/05/2015 - 10:00 | 6166464 all-priced-in
all-priced-in's picture

We called our continuous improvement program --   TQM -- Total Quality Management.

 

It helps - but it gets harder and harder to reduce cost - you reach a point where you still need sales growth.

 

Plus a lot of the ideas that save money are - buy this machine and eliminate these 10 jobs -

 

We had a policy - NO ONE LOSES THEIR JOB  because of a system improvement.

We eliminated over 300 positions through automation over a 2 year period - we had to grow to absorb the people that were displaced. Some companies just fire them.

 

 

Fri, 06/05/2015 - 16:44 | 6167778 Ginsengbull
Ginsengbull's picture

TQM, ISO, six sigma, LEAN...

 

What bullshit will they come up with next?

Fri, 06/05/2015 - 09:29 | 6166361 PrimalScream
PrimalScream's picture

Your comments are GREAT - because they get to the heart of one of the big problems in America.  The USA is now really struggling because we do NOT have the same base for INNOVATION.

HOW did America keep growing for decades.  Basically, the country had a plentiful supply of cheap energy, a large number of resources, and much much innovation.  ALL of those positive factors are now DECLINING for America.  We are hitting the limits.  This is causing the old buisness models to fail - because they are based on unlimited growth.  It's not working any more!  Lots of people like your boss - keep demanding growth.  Sorry, but they are dinosaurs.  Old business models!

Unfortunately, NEW business models are just hidden methods "to eat the h*ll out of the infrastructure".  All that is happenign is that a new group of greedy CEO's are taking over, cutting wages, slicing benefits, and running down the resources that sustained the country.  THERE IS VERY LITTLE money going into significant productive R&D in America.  The business profits are just being poured into stock buybacks, so CEO's and CFO's can boost their own salaries.  These new corporate guru's are not leaders, they are OVERPAID TERMITES!  They are simply sucking down America's riches for their own personal gain.

Little wonder that the average man and woman on the street are disgusted.

Fri, 06/05/2015 - 13:43 | 6166536 all-priced-in
all-priced-in's picture

This topic gets deep fast - and it is hard to make general statements that are always true.

So reasonable people can disagree.  I am not saying you are totally wrong - but you are missing one BIG part of it.

 

Sure innovation / R&D research are a great things - but

 

Where do you think the cash comes from to fund them?

 

Do companies that have flat sales have the ability to fund massive new technology innovations? No.

 

Can companies that are not growing access capital to fund R&D projects? No.

 

You have to be growing so you can afford to WASTE money on risky new things - if they work great - if they fail you can still stay in business. No company can really innovate without having some failures (waste of money) - so the current business must be growing and profitable or you simply can't afford to innovate.

Growth in sales and profit allows you to fund R&D to generate innovation and new technology.

 

Current management at a lot of companies are afraid to take the risk that goes with true innovation. A part of the reason is they are not growing fast enough to "cover up" the failure that always comes with trying new things.

It is the old - 

Sales cover sins -- lots of sales cover lots of sins.

Look at Google - they were (still are) making boatloads of cash - and were willing to take a few crazy projects on because they didn't crush profitability.

 

Self driving cars - sounded crazy when they first said they were looking at it - they did it anyway - no one cared about the few billion -

 

You think Google would have been doing truly innovative  R&D projects if their sales were flat?

 

 

 

 

 

 

 

Fri, 06/05/2015 - 09:33 | 6166369 swmnguy
swmnguy's picture

You've put your finger on the problems created by a system based on lending at interest.  There has to be more money tomorrow than there is today, or the whole thing collapses in on itself.  I've been self-employed as a sole proprietor for a dozen years or so now, but before that I worked for a huge number of small companies in succession.  Only 2 of them still exist.  The rest have all folded, either while I worked there or not long after I caught the smell of death (I got pretty good at that), and usually after a flawed attempt to grow without a clear plan of how to do it.

I don't think there is a way to do as you describe in our current system.  You can't keep growing payroll without growing revenues, and you can't do that without taking risks that become either unacceptable or lethal.  Your loyalty to your employees isn't going to be enough over the long run, because the employees all know that something could come out of nowhere and their loyalty to you won't pay their mortgage in that event.

The problem is both the debt-based finance system, and the almost parental role our system imposes on employers.  Employees turn into children, and employers become dysfunctional parents.  It's bad for everyone, but I've never worked anyplace where that wasn't going on to some extent.  Employment is another form of feudalism in many ways.

I don't know what the answer is, but I've been fortunate enough to develop a set of skills I can market and deliver all by myself, with tools I already have.  I gained knowledge, experience, and a reputation through working for an employer I subsequently left, and have been able to do quite well as an individual.  That could end any day as I'm well aware; I'm only as good as my last, or next, project.  But at least the risks, rewards, headaches and pride are all mine, for better or for worse.

Fri, 06/05/2015 - 09:21 | 6166332 brodix
brodix's picture

The irony here is they are unwitting accomplices of radical environmentalism. Instead of monkeywrenching the "machine," they are just stealing the oil that lubricates it.

 Who says Mother Nature doesn't have a sense of humor.

Fri, 06/05/2015 - 09:24 | 6166341 swmnguy
swmnguy's picture

I was raised by academics, which isn't quite the same as being suckled by wolves, but gives one about the same level of financial education.

When I was in my mid-20s, I was working at a company that built displays and scenery for trade shows and corporate events.  The first time I worked on a large-scale corporate meeting, I was stunned by the weirdness of it.  We built a large stage, with scenery adding decor with themed designs and corporate logos.  We had large video projection screens (well, slides and rolling film, in those days).  We had a rock-concert sound system and matching lighting package.  During the event itself, we played loud music to call up the executives, who could prance around on the large stage like they were Mick Jagger.  The attendees screamed and  applauded like they were at a Nuremberg Rally.  In a way, it was terrifying.

I also saw the way the executives were treated by their staffers, and by the production team.  The lavish backstage spreads, the door-to-door transportation, the Presidential Suites at hotels.  It was Feudalism.  These people were the new Lords and Ladies; instead of the Duke of Earl, we now have the CEO or the Vice-President of Marketing.

I also realized that there was money in catering to the vanities and insecurities of these people.  The point of these meetings is for the Executives to communicate with their underlings, of course.  But in the corporate world, certain words and phrases mean the opposite of what you and I might mean when we use them.  "Communicate" is one such word.  The Execs don't want to "Communicate," as that's a two-way process.  They want to tallk at their people, not with them.  "Accountability" is another opposite-day word, meaning, "Whatever happens, I'm not getting blamed for this...", but that's a rant for another time.

My point is, at that moment around 1988, I realized the truth of the saying that "It's an exclusive club, and you ain't in it."  I knew that no matter what I did, I could never rise above lower-middle management in a corporate environment.  Or I could stay in small companies and rise as far as the owners allowed.  Neither of those options were attractive.  I followed a path that would have been familiar to any Medieval or Renaissance young man of low birth but some ambition; become a Court Procurer of some sort to the local nobility, and stay out of political entanglements and exclusive loyalties.

Realizing we have reinstated Feudalism had a profound effect on all my perceptions, actions and expectations.  A lot of things have become more clear now.  If I think of my Medieval European History class from High School, a great deal of all this makes more sense.  And by being around corporate America but not of it, I've managed to carve out a better lifestyle for myself and my family than I would have had I tried to go at it the conventional way, by working my way up in a futile attempt to overcome my status.  The key is to become trusted, but not obligated to anyone, and certainly not identified with any one specific nobleman or faction of noblemen.  They can be ousted tomorrow.  As can you.  So never expect things to continue as they have, but note the cycles because there's about a 7-year swing in the way corporations do things, and every 14 years or so, one notices that they are doing things they were doing 14 years prior.  Meanwhile, it's becoming increasingly clear that our form of corporate finance capitalism is indeed eating itself, and that is going to have a profound effect eventually.  Timing it is a bitch, however.  So best to assume the worst, hope for the best, and then any surprises are happy ones.

And never get caught up in that "For King and Country" bullshit.

Fri, 06/05/2015 - 09:43 | 6166408 Uchtdorf
Uchtdorf's picture

+1

I came to a similar realization working in the TV commercial production business back in the late 80's and early 90's. I saw the "stars" in quiet moments backstage. They are no different than any of us. They have the same fears as the rest of us, and, in many cases, respond to their concerns with less maturity than most people.

Walking on the beach in the Bahamas during a break in the filming with a bikini-clad Cindy Crawford in 1988, I learned how insecure a woman considered to be extremely beautiful can be.  

Fri, 06/05/2015 - 10:15 | 6166505 swmnguy
swmnguy's picture

I worked in that industry in the early '90s, too.  At that time there were a lot of ads shot in the Twin Cities.  We have a lot of Fortune 500 companies headquartered here, for our relatively small population, and therefore a lot of ad agencies.  The market is small enough that most of us knew each other, but there was plenty of work.  Scenic companies tended to do live event, TV/Film/Video and theatrical work all under one roof, though they are fundamentally different industries with different needs when you really get into it.  I was able to work a little in all those areas, and do some work on special effects, too.  Some great, silly, hardworking fun.  Then it all collapsed in the mid-90s, when the ad execs realized they could shoot in Canada for cheaper, or go to California or elsewhere that is warm in January.  Only the corporate stuff still remains, and that's when the film/video people realized corporate is a different world than what they were used to.

What a weird perspective on modern America that provides.  It was a lot of fun.  I really enjoyed working my ass off for something so absurd.  I re-read Camus' "Myth of Sisyphus" several times then.

I remember that the one product that really does what it says it does is Dawn dish soap.  And never, ever buy a Bissell retail home carpet cleaning machine.  We couldn't create anything that looked like dirt that thing could clean.

Fri, 06/05/2015 - 16:02 | 6167665 FredFlintstone
FredFlintstone's picture

Good stuff, thanks for sharing your experience. I am searching for something better and was interested in what you meant by "become a Court Procurer of some sort to the local nobility". Can you elaborate and provide some examples?

Fri, 06/05/2015 - 09:28 | 6166356 Catullus
Catullus's picture

Socialist drivel. End game. "unfrettered".

More of the myth there's merger after merger until there's just a handful of mega companies.

Then corporate "fiefdoms". Pffff

The buyback movement is the result of C-Suite all being schooled at the same B-schools. Some assbag in corporate strategy says "we're making a lot of money. What should we do with it?" You can re-invest in the business. You can retain it for a rainy day and sit on cash. You can buy capital equipment with it. You can buy another company. You can give it to employees. You can return it to investors in terms of dividends. You can buy back shares. All of these things have a return. If the returns aren't attractive on re-investing, then you should be giving the money back to your investors. You shouldn't be retaining a large war chest of funds. I'm a shareholder. I can manage the money better than your corporate strategy department. Deploy it or pay me.

The part that pisses me off is when C-Suite determines that because their dividend yield is high compared to their peers, they decide to buyback shares instead. This is the implied assumption that the share price will raise because their business will continue to recieved the same P/E valuation over time. That's garbage thinking. And it can be driven by a secular change in valuations across the board. The better thing to do is just fucking pay me a dividend. I'll figure out what to do with my extra cash.

Fri, 06/05/2015 - 09:42 | 6166404 q99x2
q99x2's picture

It is not the end of unfettered capitalism (call it what you like I'll give you that) not until we see Donald Rumsfeld and Dick Cheney eating the Clinton family.

Fri, 06/05/2015 - 09:44 | 6166412 PrimalScream
PrimalScream's picture

"their business will continue to recieved the same P/E valuation over time"

Bingo.

What is the long-term P/E for companies who are NOT improving their long-term viability and competitiveness.  You can only stretch "cost cutting" so far.  You can only hire and fire the Marketing Manager so many times. 

WHAT'S noticable about companies in the USA today - how many of them do not have a clear idea of how their business plan is really going to work in the current environment.

Fri, 06/05/2015 - 10:02 | 6166470 anonymike
anonymike's picture

"This is the end game of unfettered capitalism. The signs are all here. When you cast aside reasonable restraints, the unscrupulous among us will rise to the top and exploit everyone else."

We haven't ever had unfettered capitalism in the USSA. Over the last 102 years merchantalism has evolved into full blown fascism (corporate and state powers merged to control the means and output of production). All the ills described in this article are actually caused by the restraints on unfettered capitalism. Without fiat currency, the Fed or a state supported banking cartel to help the power elite corrupt the money and its time value, investments would be made far more wisely.

The actual solution is to cast aside all government restraints upon people and their companies that go beyond simply, "to secure these rights" of "life, liberty and the pursuit of happiness". Then everything will take care of itself far better than under the oppression of a criminal gang writ large which violates "these rights" with virually every act.

Fri, 06/05/2015 - 11:50 | 6166852 Rikeska
Rikeska's picture

The author of the piece downvoted you.  Har.

Fri, 06/05/2015 - 12:20 | 6166957 BoPeople
BoPeople's picture

I suppose that this could be a "plan" to solve the problem of babyboomers who diligently trusted Wall Street, did what they were told to do and have their retirement tied up in the stock market. If the Fed and banks continue to monetize the stock markets then they can rescue the loyal babyboomers and then "poof" the shares. The percentage of shares owned by banks directly or indirectly is huge. On paper they lose the most in a market downturn... but it is only paper and as we see every day, paper losses are ignored by banks because they can always create more paper.

Oddly, this would imply that the banks have "some" conscience, even if it to only rescue their own. Or it may imply that, at least until they can reduce the level of dangerous population, they have some fear that they could not contain the anger at them, should there be a crash, and their very lives (and power) would be in danger... even from their own cronies.

Fri, 06/05/2015 - 12:24 | 6166971 Batman11
Batman11's picture

Capitalism benefits those with Capital (the clue is in the name).

a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.

It benefits the rich rather than the poor and the old rather than the young.

Capitalism works best with competition.

It used to have that from Communism and those at the top feared Communism and revolution and so had to show Capitalism worked for everyone.

Now the competition is gone and the 0.1% can funnel everything up to themselves.

The older generation grew up with a more benign form of Capitalism and everyone was allowed to acquire some Capital.

Capitalism, in its more benign form, works well for all, but this involves redistribution from the rich to the poor to combat its inherent trickle up effect.

The EU is falling apart due to this lack of redistribution.

Global trade is going down the pan due to the impoverishment of global consumers.

Globally the younger generation are being screwed due to their lack of Capital and they are being pushed onto the wrong side of the trickle up equation through every means possible, eg. student loans; expensive homes  .....

Fri, 06/05/2015 - 12:27 | 6166977 Batman11
Batman11's picture

The successful are living off their Capital and doing very little.

The rentier, who lives on income from property, investments and securities.

A good inheritence is the secret of the rentier; no work is necessary what so ever you just live off your investment income.

Hard work is what others have to do so they can get a good return on their investments.

Toil for the investor class; it's Capitalism.

 


Fri, 06/05/2015 - 12:48 | 6167044 PermaBug
PermaBug's picture

I live off my income from property as you describe. But I didn't inherit a penny, in fact I help support my elderly parents who were born during the depths of the depression and went to work at age 15, with no chance for an education.

I worked hard to get where I am, although none of it was physical labour, so you probably won't understand that.

People like you make me sick, thinking others don't deserve what they have just because you were too lazy or stupid to ever make anything of yourself.

Just because you don't know how to be successful on your own, don't try to blame those who do, it makes you look really pathetic.

 

Fri, 06/05/2015 - 12:42 | 6167020 PermaBug
PermaBug's picture

If the author of this socialist drivel was old enough to be writing back in 1988 I'm sure he was one of the morons writing that japan was going to take over the world, since the stock market there was unstoppable, and the Japanese worker was so much more dedicated than the average american. All utter nonsense, based on not knowing anything about Japan, or it's 'all show no go' workers.

Only the most simple minded person takes a situation that exists today (high number of corp buybacks and mergers) and extrapolates it to infinity (no more stock market!)

Really? Is this a joke? No doubt this moron also believes we will run out of oil all of a sudden (without prices ever rising to spur investment, new drilling new technology, alternatives etc etc etc ad nauseum).

The world is not static, it's quite the opposite, and so people adapt, markets adapt, prices adapt to changing circumstances. The only way a 'too high' (really? what's the right number, please enlighten me) level of corp buybacks causes a problem is if the GOVERNMENT bails out the losers when they leverage too much.

And no, we will never have a world of all robot employees and everyone else starves to death.

People will adapt, well, most people will, the author of this bullshit is likely too stupid to be able to do any more productive work than a robot, so he's likely to be unemployed, that we can agree on.

The rest of us will keep up with advancements in education and technology and have a better standard of living than ever before.

Sure hope I can employ a few robots one day to clean my house.

Fri, 06/05/2015 - 12:59 | 6167054 DaveA
DaveA's picture

Unfettered capitalism died a long time ago. This is the end game of soft money.

When central banks "stimulate" the economy with artificially low interest rates, wise investors short the currency by borrowing trillions of it and buying equity.

If the company whose equity you bought can survive in a hard-money, small-government economy, you'll collect its profits in hard money. If not, at least the hyperinflation wipes out your debts.

Fri, 06/05/2015 - 12:56 | 6167075 Diplodicus Rex
Diplodicus Rex's picture

"This is the end game of unfettered capitalism. "

What planet do you live on? Please point out to me where you see capitalism working. For a dictionary refresher, capital is whats left of your income when you don't spend all of it. Capitalism is taking that capital and either using it for something productive or lending it to someone to do something productive with it.

Fail

 

Fri, 06/05/2015 - 13:50 | 6167260 tangent
tangent's picture

My example of Capitalism working would be the USA before 1971, after which time capitalism ended and a solidly mixed economy came into full force.

Fri, 06/05/2015 - 13:10 | 6167117 Monetas
Monetas's picture

Ying Yang .... cannabis oil enema .... you can afford it ! Go out with a smile on your face !

Sat, 06/06/2015 - 23:49 | 6170820 Ying-Yang
Ying-Yang's picture

Lance Armstrong did coffee enemas to ramp up before bicycle racing!

A little cream and sugar perhaps? Heh

Fri, 06/05/2015 - 13:10 | 6167120 much obliged
much obliged's picture

Quote: The Stock Market Is Disappearing In One Giant Leveraged Buyout

So then, if at the end the corporations own most of themselves along with central banks, the whole of both stock and bond markets can crash comfortably. At such point pension funds and retail investors can get back in, having suffered minimal loss in the crash and start a new bull market at sane valuations.

Fri, 06/05/2015 - 13:17 | 6167151 yogibear
yogibear's picture

All the stock-buybacks causing fewer shares.

It's why IPOs are going insane. IPO frenzy.

Fri, 06/05/2015 - 13:18 | 6167158 fremannx
fremannx's picture

"The Stock Market Is Disappearing In One Giant Leveraged Buyout"

As predicted by Dow Theory non-confirmation. When the Dow Industrials and the Dow Transports diverge, a market crash is imminent. as this chart clearly shows...

 

http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...

Fri, 06/05/2015 - 13:25 | 6167188 tangent
tangent's picture

"This is the end game of unfettered capitalism"

I don't think 0% interest rates after severing the gold standard really have much to do with capitalism, though that has everything to do with leveraged stock buy-backs. I would say that government ownership of the money industry would be considered communism, and a blend of giant conglomerates and governments joinly owning the money industry would be fascism.

Capitalist banking would mean a private form of money is the base of the industry, not a government money. For example, if banks were using gold or their own worthless paper as money, then that would be unfettered capitalism. But no, what we have now isn't crony capitalism any more than it is crony communism. Its best described as a fascist economy or mixed economy.

The only two economies that can be described as capitalist in the entire world are Singapore and Hong Kong. No other places are remotely close to capitalism.

Fri, 06/05/2015 - 22:41 | 6168521 mijev
mijev's picture

Tangent, agreed. The only question mark I can see with that characterization of Singapore is that most (all?) citizens get access to subsidized public housing, but it seems to work. Some citizens rent out their public housing, buy a place for a quarter the cost across the bridge in Johor Bahru, Malaysia and commute every day. It's the only place I know in the world where you can catch a cab across a country border.There's a massive real estate development project taking place in Johor Bahru which seems to be trying to compete with singapore.

As for HK I wonder how long it can survive in its current state under Chinese mainland control. Shenzhen seems to be trying to set itself up as competition to HK, although my favorite city in that part of Guangdong is Zhongshan.

Fri, 06/05/2015 - 13:58 | 6167283 moneybots
moneybots's picture

"This is the end game of unfettered capitalism."

 

This is not unfettered capitalism.

Fri, 06/05/2015 - 23:03 | 6168551 rex-lacrymarum
rex-lacrymarum's picture

In fact it is quite the opposite. Anglo-Saxon central banking socialism. 

Fri, 06/05/2015 - 23:41 | 6168600 bunnyswanson
bunnyswanson's picture

Unfettered fraud.

Fri, 06/05/2015 - 14:10 | 6167332 anti-republocrat
anti-republocrat's picture

The stock market will not cease to exist.  What will happen is that when interest rates rise again, many of the companies who have been buying their own stock will have to roll their paper to higher interest rates.  They won't be able to earn enough gross profit to service their debt and will go bankrupt.  The few small shareholders who remain will lose their entire investment as the stock will become worthless.  Ownership of the company will pass to the financial institutions who lent the corporation the money for the buybacks.  Executives will receive golden parachutes.

Sun, 06/07/2015 - 00:11 | 6170855 Ying-Yang
Ying-Yang's picture

So true... I trust my instincts that it is time to take profits and perserve value. I am deciding on which assets.

I agree with what you say brother!

Fri, 06/05/2015 - 18:10 | 6167969 theprofromdover
theprofromdover's picture

YingTong-

Go listen to Kyle Bass; I think he is the smartest and most agile guy.

I don't think you go all-in gold and silver. I think you have to cover a range of things and accept some might lose.

I would definitely buy some land -farmland rather than city or suburban land.

Law enforcement wants to confiscate your cash, kidding on you must have acquired it by evil doings, so spread it far and wide.

You also want something that gives an inflation-proof return. You can't stand still with your money. One day soon, the middle classes will all have to rent their homes, not buy them. They will also need blue-collar jobs. Buy some apartment blocks, or industrial real estate. Or a mountain with snow and water running off it. Or a timber forest.

You have done well to have built a good nest-egg; all you should be trying to do is make sure there is enough to last your closest family to their remaining days. Do not obsess about trying to hang on to all of it. One day the government will want to tax you for it all.

 

Sat, 06/06/2015 - 23:55 | 6170827 Ying-Yang
Ying-Yang's picture

Wise words my friend... this is my goal.

I follow Kyle, he speaks clearly and gets results. Good source for sure. We will spread it out, duck and cover.

Love you like a brother, thank you!

Fri, 06/05/2015 - 22:38 | 6168519 g speed
g speed's picture

if your still reading these comments--buy some small acreage that your kids can return to if things get bad. Put tax money in a trust for twenty years of taxes. Build a small nice house or two on it-- It will give you peace of mind that you have provided-- spend the rest on some fun things for you and yours---you worked and worried enough --enjoy it. 

Sun, 06/07/2015 - 00:07 | 6170848 Ying-Yang
Ying-Yang's picture

Yes GS, that is a follow up adjustment. After rolling out of stocks we will peal off some for us providing we are confident in covering future expenses for my mom so 5-10 years. She is 92.

We have 2/3 or better in the market and it is time to take profits, pay little as possible tax on profits and spread it into things like laddered CDs instead of cash until USA gets shaky. I believe stocks will correct before US defaults if ever.

Thank you my friend

Sat, 06/06/2015 - 01:39 | 6168696 thefreeprepper
thefreeprepper's picture

"This is the end game of unfettered capitalism." Is that what we have? Could have fooled me.

Sat, 06/06/2015 - 11:16 | 6169209 Faeriedust
Faeriedust's picture

I do get tired of the misuse of the term "feudalism".  Feudalism was a system based on the power of PERSONAL LOYALTY, i.e., a counter to the rampant corruption and self-dealing of the dying Roman Empire.  As such, it was the exact opposite of what we see with winner-take-all capitalism, CEOs looting both companies and employees to extract more cash for themselves, and a monetary system gamed by the wealthy bank owners. Feudalism was about "homage"; about putting ones TRUST in Divine Law and another human being when neither secular law nor national government could be counted upon.    Does that bear any resemblance at all to what we see here?  A corrupt Roman procurator would feel right at home in D.C.; a feudal warlord would be out in the mountains forming a militia out of angry vets and ranchers trapped between corrupt commodities traders and conflicting government regulations.  THIS is not feudalism.  Feudalism was the result and the solution to THIS.

Sat, 06/06/2015 - 11:35 | 6169285 JR
JR's picture

The roof is caving in, only a fool can disregard the pieces falling on us now. Who is is causing this?

The elephant in the trading room being ignored by most all except the late Henry Ford, Philip Weiss,  Jeffrey Blankfort at Counterpunch and the Jews themselves is the influence of Jewish leverage in mergers and acquisitions on companies and the nation.

Philip Weiss writes: “Maybe it’s a sign of the end of the Jewish establishment: here are two recent mainstream pieces that frankly address the role of Jews in transforming the culture of Wall Street. The pieces are most remarkable because they express a frank recognition of the rise of Jews into the establishment beginning in the 70s, something the second author, Rob Eshman of the Jewish Journal, says we haven’t been allowed to talk about.

“First at the PBS News Hour of all places, economics correspondent Paul Solman highlights a portion of a book by John Weir Close on the mergers and acquisitions (M&A) trend on Wall Street in the ‘70s. The PBS piece is titled, ‘The Luck Sperm Club: Jews, M&A and the Unlocking of Corporate America.’ Close writes that Joseph Flom called his associates ‘the Lucky Sperm Club’:

In the late 20th century, M&A was driven by two Jews, Marty Lipton and Joe Flom, who had simultaneous epiphanies about how to take advantage of new government regulation –in other words, how to turn the rules into an instruction manual for transforming the buying and selling of companies into a profession itself. But rather than seek to buy, sell or keep companies themselves, they became the Sherpas, interpreting regulatory maps and making up new law as they went along…

…it was primarily Jews who first became expert in taking over companies against the will of their existing executives.

“Then there’s this excellent piece by Rob Eshman at the Jewish Journal on the Film, ‘The Wolf of Wall Street”…

http://mondoweiss.net/2014/01/reflects-though-scorsese

This supports Counterpunch’s Jeffrey Blankfort’s position in “The Israel Lobby and the Left”:  “Jews played a central role in American finance during the 1980s, and they were the chief beneficiaries of that decade’s corporate mergers and reorganizations.”

It was Henry Ford* and our Founders who built the American dream; it is Mayer Amschel Rothschild and his Fed (“Let me issue and control a nation’s money and I care not who writes the laws.”) that is destroying it.

At last, Daniel Drew has called out the emperor who has no clothes.

Question for downgraders: Was it Drew who corrupted the language by calling what they do "capitalislism," or was it they themselves in order to confuse the debate?

NOTE:

It was Henry Ford who first announced he would “innovate the greatest revolution in the matter of rewards for his workers ever known to the industrial world.”

And then he delivered, doubling his workers’ pay from an average wage of $2.34 to $5.00 per day and at the same time reduced the 9-hour shift to 8 hours – during a recession.

The Model T which could be bought for $850 in 1908 went for $360 eight years later. Said Ford, “Every time I lower the price a dollar, we gain a thousand new buyers."

Ford’s Model T sold fifteen million before it was dropped in 1927

Sat, 06/06/2015 - 14:45 | 6169698 PatriotFirst1776
PatriotFirst1776's picture

Ying-Yang,

I am so sorry to hear about your "situation". I am also glad to see you have discovered the "oil". We call it "the sauce" and "the cheese" around here....aka... Now eat your cheese little mouse"!

I could wax poetic about life, but suffice it to say that in my heart and soul, I believe we are spiritual beings having and SHARING a human experience. You are to be commended for your obvious commitment to your family and loved ones. The world would be a much better place if we had more commited family leaders like yourself.

I wish you and your family well and I know you will all be well and survive.

I am a great fan of music and obscure singer-songwriters. I will paste the lyrics to a song that I love, love, love by a singer-songwriter who has been quietly enjoying a lot of success over his 50 years of writing.

The sentitment of this song says it all in my well-wishes and observations of the world around us. You can hear the song at iTunes.....and I'm sure other online sites. I own the music file.

Best of luck to you and your family.

"I Wish That I Could Heal"
Lyrics and Music by Chet Nichols
Copyright 2008 by Chet Nichols (ASCAP) & Magic Garage Music (ASCAP) 
http://www.chetnicholsmusic.com
ALL RIGHTS RESERVED

Verse One
In a world of possibilities
There are so many things to be
But, in the glare of harsh realities
There's too much suffering I see
If you gave me just one wish
Only one would work for me
Nothing else could really make much sense
"Cause, Lord, I'd wish that I could heal
I'd wish that I could heal
I'd wish that I could heal

Verse Two
Would you wish that you could fly
To the moon and back?
Or that you could be invisible
Live your life and leave no tracks?
Or that you' d be the most beautiful
And have the world lounge at your feet?
I know I'd pass on all of these 
If I could only learn to heal

Chorus
Heal the hatred
Heal the wars
Clean the slates that hold the scores
Heal the health
And all the pain
Heal everything driving us insane
Heal the present
Heal the past
Heal the planet so it will last
Heal the marriage
That on the rocks
Heal the hearts encased in locks
Heal the fears
That hold you back
And help to get your life on track
Heal the governments
And Corporate whores
Who rob us blind
Then lock the doors
Lord, I'll offer a great deal
If You'll help me learn to heal
I'd wish that I could heal

Verse Three
Would you wish for a peaceful world
And a contented heart?
Or give your wish to someone else
And give their lives a brand new start?
Would you help every dream come true
For any person in the world?
You'll do this and so much more
If you'll only learn to heal

Chorus
Heal the hatred
Heal the wars
Clean the slates that hold the scores
Heal the health
And all the pain
Heal everything driving us insane
Heal the present
Heal the past
Heal the planet so it will last
Heal the marriage
That on the rocks
Heal the hearts encased in locks
Heal the fears
That hold you back
And help to get your life on track
Heal the governments
And corporate whores
Who rob us blind
Then lock the doors
Lord, we'll offer a great deal
If You'll teach us all to heal
I wish that we could heal
I wish that we could heal
I wish that we could heal

Sun, 06/07/2015 - 00:03 | 6170845 Ying-Yang
Ying-Yang's picture

Very nice words, it is odd that I have been thinking about what you are saying.

I am tight with God, my father. He has helped me all my life. I should have been dead back in 2002. Powerful stuff, seen it time after time when chips were down.

I have thought about enjoying the new adventure, enjoying any perks but also what if? What if I could hangout and help folks in a new way. Would be cool should he think so we talk.

Don't know if I would be any good, I would have to watch my emotions..... heh

Great thought and love to you brother.

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