Will the S&P's rally hurt capitalism?—Commentary: "But what's really galling to see is when CEOs do take action, what they chose to spend those productive resources on.
CEOs spent $445 billion buying back their own companies' stock in the 12 months to October, according to S&P Dow Jones.
That means for every $2 the Fed prints to buy Treasurys and mortgage-backed securities, CEOs spend another $1 to boost the stock market. No wonder it's been a such a banner year!
True, that cash belongs to shareholders and they have the right to have it "returned" to them through higher stock prices. But CEOs also launch buybacks to protect their own careers; to fend off potential approaches from loud, short-term, activist shareholders. Buybacks also make it look like CEOs are growing their earnings per share more rapidly, in addition to doing wonders for the value of their personal stock options.
But share buybacks are of zero productive value."
'via Blog this'
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