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"For Every Job Created In The US This Decade, US Corporations Spent $296,000 On Stock Buybacks"

Tyler Durden's picture




 

Yesterday in "$20 Trillion In Government Bonds Yield Under 1%: The Stunning Facts How We Got There", we did just that: showed several "facts" demonstrating how, as Bloomberg puts it this morning, "QE Helped Wall Street Steamroll Main Street."

It appears many missed the findings of how central planning has now gone full retard, so here again, are the facts:

  • There have been 606 global rate cuts since LEH
  • $12.4 trillion of central bank asset purchases (QE) since Bear Stearns
  • The Fed is operating a zero rate policy for the longest period ever (even exceeding the WW2 Aug’37-Sep’42 zero rate period)
  • European central banks operating negative rate policies (Swiss policy rate currently -0.75%; Sweden’s policy rate currently -0.35
  • Just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary "without hesitation"
  • $6.3 trillion global government bonds currently yielding <0%
  • $20.0 trillion global government bonds currently yielding <1%
  • An investment of $100 in a portfolio of global stocks & bonds (60:40) since the onset of QE1 would now be worth $205; in contrast, a wage of $100 has risen to just $114 over the same period
  • US prime (“CBD”) office real estate has appreciated 168% this decade; in contrast, the value of US residential property across America has risen just 16%
  • For every $100 US venture capital & private equity funds raised Jan 1st 2010 they are now raising $275; in contrast, for every $100 of US mortgage credit extended and accepted at the beginning of this decade, just $61 was extended and accepted in June 2015 (see Chart 6 - a big reason the US consumer remains so moribund)

And, as per the title, the punchline:

  • For every 1 job created in the US this decade, US corporations have spent $296,000 on stock buybacks

Just as we warned would happen nearly four years ago.

* * *

We conclude with, what else, America's most progessive thinking.

 

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Mon, 11/02/2015 - 11:37 | 6739639 Spitzer
Spitzer's picture

Euro debt yields less because they are issuing way less then the US. Dollar is not the cleanest dirty shirt. Not even close.

Mon, 11/02/2015 - 11:40 | 6739660 XAU XAG
XAU XAG's picture

It's all........................FUBAR

Mon, 11/02/2015 - 11:49 | 6739692 JRobby
JRobby's picture

That is surely limiting the "new hire budget"

 

Of course it is more important to preserve the wealth of the largest oligarch shareholders at the cost of the entire economy.

 

PS: Thanks for the Bernanke "Hero" cover. I had eaten some bad food and it just wouldn't come up! All good now though!

Mon, 11/02/2015 - 12:27 | 6739841 knukles
knukles's picture

Bernak the Hero according to a Prime Official Organ of the NWO.  Duh

Mon, 11/02/2015 - 11:38 | 6739642 auntiesocial
Mon, 11/02/2015 - 11:59 | 6739643 gaoptimize
gaoptimize's picture

This could be a good thing if the buy-back money was used by investors for venture capital and IPOs (rather than Gov. and Corp. bonds).

Mon, 11/02/2015 - 11:39 | 6739651 yogibear
yogibear's picture

Bernanke is the robber-baron's best man of the last 7 years. Their hero.

Mon, 11/02/2015 - 11:47 | 6739690 J Jason Djfmam
J Jason Djfmam's picture

He has saved nothing.

He merely assisted in putting off the inevitable.

There will be a day of reckoning.

The ship is going down.

Get out before you drown.

Mon, 11/02/2015 - 11:40 | 6739654 NoDebt
NoDebt's picture

Stock buybacks should be reclassified as CapEx and this would all look a lot more palatable.

Besides, the article is using the now-obsolete metric of jobs "created".  They should be using the newer, more inclusinve "jobs saved or created" metric popularized by the Obama administration.

Mon, 11/02/2015 - 11:43 | 6739668 KnuckleDragger-X
KnuckleDragger-X's picture

Redifine it as "Executive CapEx" to improve corporate efficiency of the C-suite.....

Mon, 11/02/2015 - 11:45 | 6739674 Tyler Durden
Tyler Durden's picture

Considering the Obamacare "Tax" is a boost to GDP, you are correct.

Mon, 11/02/2015 - 11:53 | 6739710 NoDebt
NoDebt's picture

I think we've all stumbled upon the real key to maintaining this whole ongoing shit show:  just reclassify bad things as good things and suddenly everything is fine again.

I'm going to reclassify my evening drinking binges as "enjoyable blood-thinning exercises that reduce the chances of dying of a blood clot".

Mon, 11/02/2015 - 12:11 | 6739770 RiderOnTheStorm
RiderOnTheStorm's picture

Well said!!!  I don't trust a man who doesn't drink!!

Mon, 11/02/2015 - 12:15 | 6739789 boattrash
boattrash's picture

We could really lower that $296K a lot, if we only divided it by the number of jobs destroyed...

Mon, 11/02/2015 - 12:06 | 6739749 JRobby
JRobby's picture

CapX is a GDP component.

Stock buy backs are not.

Hence the palatability issue you are experiencing.

Buy backs are only to sustain the wealth of the largest holders in the face of declining corporate sales. There is no benefit to the economy.

Mon, 11/02/2015 - 11:40 | 6739658 KnuckleDragger-X
KnuckleDragger-X's picture

The drift's of fairy dust are getting deep on Wall St. as the magic money blizzard continues......

Mon, 11/02/2015 - 11:44 | 6739671 Don Pancho
Don Pancho's picture

Paul Eberhart would like to thank ben bernanke the hero. wwww.pauleberhart.com

Mon, 11/02/2015 - 11:47 | 6739684 Dr. Engali
Dr. Engali's picture

Hey, corporations are people too.  How would we get trickled on if the insiders could buy that second yacht or third vacation home?   

Mon, 11/02/2015 - 11:47 | 6739687 JustObserving
JustObserving's picture

Stocks must be levitated at all costs to sustain the wealth effect that sustains the hollowed-out US economy.  

A market crash and the US economy will not recover for decades, if ever.

Mon, 11/02/2015 - 12:14 | 6739780 Raymond_K._Hessel
Raymond_K._Hessel's picture

invest in ball bearings, kid.

It's ALL ball bearings these days.

Mon, 11/02/2015 - 13:46 | 6740132 City_Of_Champyinz
City_Of_Champyinz's picture

Do you need a refresher course???

Mon, 11/02/2015 - 12:28 | 6739848 yogibear
yogibear's picture

All the fed members speak in terms of stocks going up. It's their only game now,

Elevate stocks and enrich the 1% at all costs.

Transfer more wealth from the 99% to give to the  1%.

Mon, 11/02/2015 - 11:47 | 6739689 To Hell In A Ha...
To Hell In A Handbasket's picture

The Atlantic is a long established neo-con rag, masquerading as a serious journal. Only the uniformed would believe the portrayal of Bernanke, as somebody who saved the global economy and thus shows the knowledgeable that The Atlantic, is a piece of shit propaganda news merchant, not even worthy as Gerbil or Rabbit hutch paper and is only worthy of wiping your arse with in an emergency.

Mon, 11/02/2015 - 12:32 | 6739859 gcjohns1971
gcjohns1971's picture

" The Atlantic, is a piece of shit propaganda news merchant, not even worthy as Gerbil or Rabbit hutch paper and is only worthy of wiping your arse with in an emergency."

 

No it isn't.

Prove your point.

The Atlantic is far too saturated with propaganda ink to be absorbant, and hence is worthless as toilet paper.

But it starts campfires very well.

 

P.S.  Don't use it to light a fireplace, or woodburning stove.  The inks produce toxic fumes when burned (or read).

Mon, 11/02/2015 - 11:50 | 6739693 rejected
rejected's picture

"$12.4 trillion of central bank asset purchases (QE) since Bear Stearns"

The job of the Central Bank(s) is to buy everyone and everything,  paid with their worthless paper,,, and we assist them while looking for their excrement droppings.

Mon, 11/02/2015 - 11:55 | 6739705 ebworthen
ebworthen's picture

"The Zero" ...it should read with Bernankes smug mug.

Zero ethics and morality, zero return on savings, zero bailouts for individuals and households -yet infinite FED gravy for Wall Street and their corrupt banks/corporations/insurers.

Middle class meet machete, lower class meet lipstick, Elite class...welcome to Elysium!

Mon, 11/02/2015 - 11:56 | 6739719 Bill of Rights
Bill of Rights's picture

Confirmation the last seven years has been nothing but bullshit...

Mon, 11/02/2015 - 12:00 | 6739731 gcjohns1971
gcjohns1971's picture

Reposting my comment to last night's "Equity Rebound" article:

 

Of these companies, those who borrowed significantly to implement share buy-backs will be going bankrupt.

The Fed is printing a very great deal of money to keep ahead of deflation. 

Deflation is caused by the extension of credit not being a loan of existing currency, but the creation of completely new currency as nothing more than an accounting entry at the time the loan is written.  

For this reason, all loans are fundamentally unpayable without continuous monetary inflation.   There litterally doesn't exist enough 'base money' - meaning actual currency created by the central bank - to pay back ANY loans without robbing one loan's payback money to pay another.

When a loan is created, its whole face value 'POPS' into existence.   But when it defaults its whole Face Value PLUS INTEREST disappears from the money supply.

For instance a $100K 30-year fixed mortgage at 4% has a face value of $100K... $100K is *created* when the loan is written (it is just an accounting entry, the bank doesn't actually have to have $100K available for loaning).   But if that same loan defaults, $171,869.51 DISAPPEARS from the money supply.  Specifically, $72K disappear from future earnings, a.k.a. "Accounts Receivable".

The same dynamics work for any loan.

What should strike you is that there is no numeraire, and therefore no collateral of relatively fixed monetary value attached to any loan.

Sure, there's a house.

Sure, in the case of the company, there is a bunch of real property and capital equipment.

But their worth relative to other things is almost wholly discretionary as a matter of supply and demand.  Supply and demand are GREATLY distorted by this process of constant monetary inflation.

So the same house that today costs $100K would have Cost $1000 (or less) a century ago.  And they can cost $1000 (or less) again at any time, if enough loans default - due to monetary deflation - or due to cratering demand as a function of widespread defaults.

Just look at Detroit, where exactly that has happened...and to exactly that degree.  No kidding.

Banks make loans to businesses for share buybacks the same way mortgage lenders make mortgages. 

AND

The Central Bank creates currency in the same way the mortgage lender creates mortgages.  The gov't takes out a loan (TBill).  The CB puts it on its asset sheet, and then creates an equal amount of currency.

See?  All loans are "Assets" to the bank.   All currency is a "Liability" to the bank...because they owe it to someone.   And given that both the loan, and the currency are accounting entries, when a payment is made it gets subtracted from the banks liability, and an equal amount subtracted from its assets.  POOF!  Some currency just disappeared!

So...when I say "The Fed is printing a very great deal of money...", it means that credit is being expanded by an even greater amount... and we were already at a point where the real economy was unable to service all this debt.

Hence, one of two variants will happen, both with the same final ending:

A)  The CB will stop printing currency...and as loan payments are made  there is less and less currency left to pay other loans....until there isn't enough at all.  Then everyone defaults.  Everyone with outstanding loans then goes bankrupt - even the gov't.   In defaulting...the dollar itself (which is naked also, having no collateral) disappears. 

B) They continue printing currency...which means that they must continually, and exponentially increase money printing until people lose faith in the currency.  When people lose faith in it, they would rather have real things than have currency...and everyone goes to the market to buy at the same time.  Inasmuch as there is more currency being bid for real stuff than real stuff being offered for currency...the value of the currency goes down.   This results in those with real stuff to offer, and the opportunity to do early debt-payoffs, an opportunity to pay off those debts cheaply...which results in the retirement of that currency...and which, ultimately, leaves those who cannot repurchase their depreciating debt as easily holding the bag (debt) but with all the currency with which to repay already retired...

So who can't repurchase their own debt without it being considered a 'default'???

Government

Some Business debts

They'll be holding the bag. 

Mon, 11/02/2015 - 12:06 | 6739752 cigarEngineer
cigarEngineer's picture

Stock buybacks are good. Otherwise, the corporations would get stronger and larger. If they become weaker and more susceptible, then smaller, better upstarts have a chance.

Mon, 11/02/2015 - 12:15 | 6739786 Raymond_K._Hessel
Raymond_K._Hessel's picture

Anyone every just ask someone on the FOMC if they could "prove" that their actions will do something approaching what they claim?

Mon, 11/02/2015 - 12:25 | 6739831 Caleb Abell
Caleb Abell's picture

"For Every Job Created In The US This Decade, US Corporations Spent $296,000 On Stock Buybacks"

The title is wrong.  It should read:

For Every Bartender and Waiter Job Created In The US This Decade, US Corporations Spent $296,000 On Stock Buybacks"

Mon, 11/02/2015 - 12:34 | 6739872 tnquake
tnquake's picture

Does that include the H1B's at Disney, South Cal Ed, Microsoft, IBM, Toys-R-Us, ... ?

 

Mon, 11/02/2015 - 12:44 | 6739919 I Write Code
I Write Code's picture

... not that there's anything wrong with that.  Just don't count it as economic activity.

Mon, 11/02/2015 - 12:48 | 6739940 fowlerja
fowlerja's picture

If photographers ever caught Benny Burrankee with his mouth opened... they would see a forked tongue... Benny did not save anything... he spent everything...

Mon, 11/02/2015 - 13:24 | 6740063 cheech_wizard
cheech_wizard's picture

For starters, it's the Atlantic. Another rag best used for lining cat boxes or parakeet cages...

Second, the title is all wrong... should read "The Zero".

Third, Lowenstein couldn't possibly be Jewish, could it?

Mon, 11/02/2015 - 14:15 | 6740232 Johnny Horscaulk
Johnny Horscaulk's picture

it's an old song but - the issuing power of public currency should not be in private hands.

http://positivemoney.org/how-money-works/how-banks-create-money/

Even if the interest payments are deemed de minimus, the power/corruption it invites is far worse that the alleged dangers of letting 'politicians' determine monetary policy.

We let them determine war and trade policy. We let the DOJ operate under the Executive, which could have to prosecute executive branch members, and the judiciary is part of the government yet rules on cases involving government.

The notion that economic or monetary policy simply must be in the hands of private banks is utterly lacking in merit.

http://positivemoney.org/how-money-works/how-banks-create-money/

Mon, 11/02/2015 - 14:50 | 6740364 wizteknet
wizteknet's picture

Nice job, get it?

Mon, 11/02/2015 - 14:59 | 6740409 Jack Daniels Esq
Jack Daniels Esq's picture

USG is 100% fucking useless - fuck Barry

Mon, 11/02/2015 - 15:13 | 6740461 Wow72
Wow72's picture

THE ZERO would be more appropriate.

Mon, 11/02/2015 - 16:47 | 6740864 Colonel Klink
Colonel Klink's picture

I can't wait until all those stock buybacks come back to bite these fascist corporations in the ass.

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