Corporate Buybacks Rip-off Share Holders

The usual justification for corporations buying in their own stock to raise the share price is that they are creating value for shareholders, or at the worst, retaining value. Of course, this is a lot of B.S. since the only reason corporations buy in shares is to enrich the executives whose compensation is linked to the share price. The sad truth is that there are less shares of S&P 500 companies outstanding today than there were a decade ago, and those buy-ins have contributed to the astronomical levels the stock market has reached. And we're all suckers for allowing it.

When a corporation buys back it shares instead of paying dividends with retained cash not necessary for operations or investment in the future competitiveness of the company, it's stealing money from the shareholders and putting it into the pockets of executives and investment bankers. There's no value to the average shareholder in having the share price artificially inflated, when it comes down, that money is lost.

What's even worse is that many of the leading corporations in America have taken to buying back their stock with borrowed money! They give the excuse that the shares are "undervalued" so they represent a better investment for the company than new product development and a better return for investors than dividends. In fact, all they are doing is borrowing from the company's future to enrich the corporate officers in the present.

It's a shame that power and greed go together in such a way as to ensure an increasing level of regulation in the capital markets until the country loses many of the competitive advantages that a more open system offered. But that's the bottom line with the S.O.B.s who run corporations in America. Their greed knows no bounds, they have no shame, and you can always count of them to do the wrong thing.