Tuesday, September 22, 2009

The Corporate Profligacy Bubble

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it." -- Frederic Bastiat

Chart courtesy of the New York Times

Isn't it ironic that just a year ago corporations were buying back record shares and this year financial firms are reissuing record shares. And the corporate debt market is exploding. Both dynamics have effectively unwound the record stock repurchases we saw this past cycle as it pertains to shareholder value.

I wrote on here years ago that I don't like stock buybacks. This dynamic is often more about personally enriching corporate executives rather than for any value to the company. In fact, buybacks are often counter to long term goals of a company. This graphic ties in with countless posts on here over the years -the financialization of our corporate leadership structure and the subsequent destructive decision-making by said idiots, the great theft of America's wealth with the massive bubble in executive pay, the earnings bubble, failed corporate governance and incentive structures, a leadership vacuum in society, the failures of our business schools and college educational system, the wrongly-perceived brilliance of CEOs, insiders are not smart money, the corporate debt bubble (many corporations issued billions of debt to buy back shares thus actually weakening the financial strength of their balance sheets and shareholder equity at the worst time in modern history. How's that for accountability?) and on and on. We've covered most every interpretation one can imagine as it pertains to this graphic.

What can you surmise based on all of these posts and what you see today? Is your belief system shattered? Do you now question who or what to believe? Hopefully so. Because that is my intent. To encourage you to educate and inform yourself and trust what you know deep down to be true regardless of what media or politicians tell you. To realize authority is not to be confused with leadership or truth.

With truth comes enlightenment and awakening. And with an awakening comes a completely different world. You might consider this to be the start of the greatest social movement in the history of the United States of America. Possibly greater than the American Revolution. For this is a populist movement to restore nobility, equality and virtue to our democracy. For everyone. An ideal which was never fulfilled by the American Revolution.

Here's the link to the article from which we took the above graphic.....from the always insightful Floyd Norris.

posted by TimingLogic at 7:11 AM