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There’s no doubt that lots of well connected super rich will benefit from the next round of govt bailouts....probably to the airline industry. I liked the fact that Mark Cuban is thinking about spreading the future recovery bailout money w workers rather than just well connected CEOs who gets millions of stock options while price of stocks of these companies being bailed out are at all time lows, and then being backed by Govt Tax Payers guaranteed loans to help company recovers, then the company recovers and its the CEO’s and the well to do who have cash now to buy these stocks on the cheap who benefits. However, the workers don’t benefit from this at all besides keeping their jobs even though the bailout was at the people’s/taxpayers expense. I’d rather that wealth be spread to the mass of workers than hoarded by the 1% executives and their friends.
Also, I agreed w Cuban that these companies that ultimately recover from a govt bailout should not be able to use future cash holdings on its company’s stock buyback. Stock buybacks are just gimmicks for company’s to artificially inflate the stock price to shareholders when the company are no longer innovating. If you’re a CEO of a company and you own a bunch of shares of stocks and you spend your company’s cash war chest to buy back shares of the company to inflate the share price, that’s not leadership! That’s fleecing the company before you bail on that company w your golden parachute.
For instance, after the govt have global companies major tax incentives to repatriate their overseas profits back to the US, what do these companies do w this money? Many of them opted to use the cash to buy back company stocks to bolster its stock value when they could have pumped it into more R&D into innovating its products or developing new ones. Apple did this because it was sitting on billions of dollars of repatriated cash and iPhone sales were stagnating so they bought back shares to inflate its stock price.
I hope the next bailout allows more employees and people to benefit.
I’m no economics buy but I think Mark Cuban is spot on wrt this issue.
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