Who's The Sucker?

Authored by Jim Quinn via The Burning Platform blog,

The two charts below reveal what is going on in the boardrooms of corporate America and on Wall Street, where those in the know are doing what they do best – screwing average American families.

The Trump tax cuts are taking full effect. Corporations will pay $60 billion less in taxes this year. It appears they are taking all $60 billion in savings, borrowing another $80 billion from Wall Street, and buying back their own stock at near all-time high prices.

If you thought the narrative about corporations using their tax savings to invest in new facilities and hiring thousands of new employees was going to happen, you haven’t been paying attention to how things work in the real world. Even though corporate GAAP profits have been flat for the last few years, the stock buybacks, funded by low interest debt provided by the Fed, increase the EPS of mega-corporations thereby pumping up the salaries and bonuses of top corporate executives.

These sociopaths don’t give a crap about their shareholders, employees, or customers. Look at the amount of stock they bought back in 2007, just before the greatest financial collapse in modern history. These pitiful excuses for leaders seem to get the old mantra of “buy low and sell high” backwards. They used shareholder money to buy at the top in 2007 while pumping up their personal bonuses and then bought virtually nothing in 2009 after prices were down over 50%. What gutless wonders. Now they are repeating it all over again.

These very same corporate executives who are so generous with their shareholder’s funds, are doing the exact opposite with their own money. Insider selling of their company stock is at record levels. The “smart money” is corporate insiders who know what is really happening inside their companies. As you can see, they knew what was happening in 2000 and 2007 as they bailed out before the stock market tanked. Observe what they are doing now. I wonder what happens next.

These corporate psychopaths in suits, along with the Wall Street cabal, and their propaganda mainstream media machine have lured the average Joe back into the market, promising ever rising returns. They’ve convinced the masses it’s safe to go back into the water while great white sharks lurk in the shallows. They expect you to just do what they say rather than notice what they are doing. They are counting on millions of suckers to fund their latest scheme to defraud America. So it goes.

Comments

lonesome foghorn peopledontwanttruth Wed, 06/13/2018 - 15:33 Permalink

Agreed Bad Shit is on the horizon. But let's not exaggerate. It's almost cheering to recall the Dark Ages, the Black Death, the Mongol Invasions, the two world wars, some very large, vary nasty civil wars in China, the obliteration of pre-Columbian civilizations (hope I'm not sounding PC), the East India Co. raping India, all kinds of other plagues, famines, natural disasters, and other calamities and civilizational disasters I for one never heard of or have forgotten. So many many. Many so bigly. And going way way backly. 

We've had an interesting run, but what the hey, it's time for a reset. Cleanse us of useless eaters and the blue-haired, tatted, pierced feminazis and the antiphas and Marxist academics and whatever. All those angry basement dwellers are in for a shock. They believe that they are hard, when they are merely a symptom of long-term abundance. 

Good people will emerge and rebuild. Just like before.

In reply to by peopledontwanttruth

HRH of Aquitaine 2.0 brianshell Wed, 06/13/2018 - 17:16 Permalink

Not everyone. You have to live somewhere. Buying a house allowed me to stablize my housing cost at a fixed rate (2.875% to be exact. Prior to buying my current house I was renting a townhouse and the rental rate was creeping up once a year. I wan't happy paying $1650 a month to the landlord and sharing a wall with a neighbor, either). Currently I pay $1020 in PITI. I can't rent a crappy apartment, in my area, for that price, and I am living in a stick-built, single-family residence with a yard and decent neighbor's. I don't plan on being here next year, but for now, it works. Next year it will be a rental and I can easily charge $1600/$1700 a month, rent, in my area.

Some people did get out of debt, reduce expenses, and start saving like there was no tomorrow after 2008. Not all, but some. Painful lesson, to be sure. There are new folks that will learn the lesson, like I did, the hard way. I have tried to pass on my hard earned knowledge to others so they can avoid what happened to me. How many listen? Well, there's the rub.

In reply to by brianshell

JuliaS Cognitive Dissonance Wed, 06/13/2018 - 14:52 Permalink

Being devil's advocate here - most companies understand that there is no more room left to expand. The real economy is contracting. Stock repurchasing is the last resort when you've got use-it-or-lose-it capital and no good place to park it.

Would you build more stores at this point? Would you hire more workers? Would you upgrade equipment? I wouldn't.

Yes, the companies are run by sociopaths, but it takes one to operate a corporation. A non-sociopath would snap and quit an hour into his first day.

In reply to by Cognitive Dissonance

JuliaS house biscuit Wed, 06/13/2018 - 18:55 Permalink

Google Jordan B. Peterson's lectures on alpha male psyche. He'll explain the exact personality type it takes to run a firm. Ben Shapiro also has a few talks on the subject of sociopath-bashing.

Believe me, to run a large firm you need to have a certain set of less than admirable qualities. Either you do, or someone else will do the job for you. It's an attribute of scale. The moment you migrate beyond mom'n'pop scope of operation, you have to become aggressive, relentless, cheating to survive both as an individual and as a company. Sociopaths and big business are inseparable. The only good guys are ones who haven't been exposed yet.

Name a big firm that does things right and isn't ran by a sociopath. I personally can't think of any.

In reply to by house biscuit

j0nx Wed, 06/13/2018 - 13:56 Permalink

I thought it was very convenient myself about how all of this inflation started about the same time the tax cuts took effect. Extra money in paycheck negated...

Roger Ramjet Wed, 06/13/2018 - 13:56 Permalink

Well if you really want to be pissed off, insiders are selling their own shares while the company is conducting their share buybacks (and pumping up the share price).  How is this even legal?

Not really sure how any board member, who is responsible for looking out for the interests of the shareholders, could allow this to occur?

 

rosiescenario Roger Ramjet Wed, 06/13/2018 - 14:40 Permalink

Even more galling is managements use of shareholder assets to pursue managements' political agenda. For example just yesterday Intuit decides that it will reduce its income, profit, and value because management is against the 2nd amendment. Where are the class action lawyers when you need them? An action should be brought on behalf of Intuit's shareholders against the entire Board and all the management complicit in this illegal misuse of shareholder assets.

Another recent one, Dicks Sporting Goods....how much did that political action damage its shareholders? There are many more. When did it become acceptable for those running a publicly traded company to steal shareholders assets?

Why doesn't Trump get the SEC to enforce the law on publicly traded companies using shareholders' assets in this illegal fashion?

In reply to by Roger Ramjet

brianshell Roger Ramjet Wed, 06/13/2018 - 18:27 Permalink

Knowing that many corporations have crony access to lenders who have access to the Fed window and use that cheap money to buy back shares, I mentioned the process to one our senior executives. He seemed unaware but said that our corporation had too much cash and used that to buy back shares.

I later thought, that means our corporation decided that share buy backs were preferable to research and development.

There was a time when executive salaries were not charged onerous tax. After certain leftist political group raised the high wage income tax, directors found a work around to pay executives their due.

Thus the law of unintended consequences came into play.

I rather like the old arrangement of partnerships where all were personally liable and much more sensible decisions were made and corporations were not "persons" to hide behind.

In reply to by Roger Ramjet

ToSoft4Truth Wed, 06/13/2018 - 14:07 Permalink

Cars and Banks got bailouts.  Aluminum and steel and corn flakes got bailouts.  That small company in Illinois got one too.  Mall operators will get a bailout.  Soy bean farmers will get a bailout. 

Justify stealing and go take what you want.