Re: [A-List] A question on buybacks

["Anne Williamson" <annewilliamson@xxxxxxx>]

The buybacks were a function of managers
trying to raise earnings short term (by reducing
claimants to co. earnings) in order to satisfy the
deceptive new dogma of "shareholder rights,"
(earnings divided by fewer shareholders = greater
paper profits, and therefore a higher share price.

The bubble was all about higher share prices,
not increasing earnings -- increasing paper.  Sigh.
Once you start on fiat, the distortions truly never
end --- paper debt, upon paper debt, upon more
paper from here to the Glory Hole.)

Really, the "market mania" of the 1990s was
profoundly anti-market -- just as a kiss is still
a kiss, and a sigh still a sigh -- profits are what
create jobs, fund pensions, and make the capital
base from which funding for public works is
drawn -- hate it you may, but profits fuel everything
for everybody.  Sadly, profits dishonestly earned
are still profits.  In the near term, both honest and
dishonest profits seem to have the same effect economically;
after all, there's more money in the "float" for everybody.

There's the rub, as key as profits are the integrity of
their source and creation are just as important.  Dishonest
money almost always gives a poor return to both the
individual and society one way or another.  Culture
is the other side of the profits coin.

Speaking only economically though, remember
profits come from capital investment -- and
since many of the bubble firms went into debt in
order to create short term "magic" -- the firms
that today don't have the money for capital investment
are the ones that bought back shares, their rising
share values paper profits long gone.  Again, all that
made a nice "book" short term, but long term
the gambit canabalized the firm's themselves.

And if a firm has no earnings, no capital investment,
then profits fall and layoffs soon emerge.  "Shareholder
rights" was another one of those "sounds-good-works-
terrible" 1990s frolics.  - Anne

----- Original Message -----
From: Sabri Oncu <soncu@xxxxxxxxxxx>
To: ALIST <a-list@xxxxxxxxxxxxxxxxxxx>
Sent: Tuesday, April 23, 2002 3:06 PM
Subject: [A-List] A question on buybacks


> Can Anne, Henry or anyone else with the knowledge offer an
> analysis of the share buyback frenzy of the 1990s?
>
> Best,
> Sabri
>
>
>