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2300 Nueces

Bailouts for large Corporations???

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I don't want this to be political.  I would consider myself more conservative and would like to discuss the moral hazard of bailing out corporations that have been buying back stock with debt for a decade.  Many corporations will want to receive a government bailout while purchasing company stock for the purpose of paying large bonuses to company executives.  This is a moral hazard and these companies should not receive a bailout.  These executives should be jailed for corruption in my opinion.  Get ready because this is about to happen.  Many of these CEO's were "retiring" in January.  Hmmmm.....

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You mean Freedom Payments?

/NO CR

/lol at our government Bc “bailout” is a bad word 

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1 minute ago, Js1 said:

You mean Freedom Payments?

/NO CR

/lol at our government Bc “bailout” is a bad word 

I have the sinking feeling that anyone under the age of 55 is never going to be able to retire.  We are going to be paying off this "public" debt til they dump us in a grave.

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I think we can escape the inherent political discussion baked into this and just discuss freely/economically...what exactly was the strategy during a massive bull-market run-up of individual equity issues, to leverage yourself without a commensurate earnings growth trajectory, with which to buy back your own stock...to what ends?  

Or is this when we finally discover what staying public serves one purpose above all others...to get bailout money/cheap credit in times like this (and so many before it)?

I'll never understand American's fascination with being publicly traded?  Oh right yeah...access to capital.  Because that's impossible otherwise, right?  

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I'm against doing any bailout, and doing it anytime now is particularly stupid. We won't know the full economic implications for awhile. Until then they can run on IOU's.

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Just now, Parliament said:

I'm against doing any bailout, and doing it anytime now is particularly stupid. We won't know the full economic implications for awhile. Until then they can run on IOU's.

Wtf is the difference?

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Wtf is the difference?

The difference is if we do it now, we may hafta come back and do it again. To be clear, I'm 100% against doing anything.

 

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I like the suggestion that companies must first sell all the stock they have bought back over the past 20 years before being considered for a government handout.

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To be clear small business, and I mean truly small businesses, will have irreparable harm done to them if nothing is done.  I know the title is about larger corporations but truly small businesses are going to need help. 

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2 minutes ago, RayDog said:

I like the suggestion that companies must first sell all the stock they have bought back over the past 20 years before being considered for a government handout.

I'm sort it in this camp.

If not this extreme, at least putting stipulations that money can NOT be used to by more stock back nor use it to prop up a retiring executive's retirement bonus.

I know my idea is pretty vague but I believe I'll let the real money men here address my general idea in more detail if they're inclined.

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Posted (edited)

Is it only buybacks that you want to penalize?  There's probably a dozen other shitty management practices that you could penalize.

And a buyback isn't necessarily a shitty management practice.  More information is needed.  Buybacks don't inevitably lead to increased officer compensation.  It might if they buy the officer's shares at a good price.  Or if it props up the share price and triggers bonuses.  What if the buyback did none of that?  What if they didn't use increased revenue/profit from the tax cut to buy back shares?

Or just penalize asking for a bailout, or accepting one.

Edited by TwiceHorn

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4 minutes ago, VABuckeye said:

To be clear small business, and I mean truly small businesses, will have irreparable harm done to them if nothing is done.  I know the title is about larger corporations but truly small businesses are going to need help. 

I'd much rather see financial support given to small business even if I am also skeptical of the use.

I KNOW what big businesses are going to do with a big wad of money.

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1 minute ago, TwiceHorn said:

Is it only buybacks that you want to penalize?  There's probably a dozen other shitty management practices that you could penalize.

Or just penalize asking for a bailout, or accepting one.

I'm open to suggestions. That's just one I can think of easiest.

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3 minutes ago, TwiceHorn said:

Is it only buybacks that you want to penalize?  There's probably a dozen other shitty management practices that you could penalize.

Or just penalize asking for a bailout, or accepting one.

This is not my area of expertise,  but this is an opportunity to redraw the lines of what is considered a corrupt business practice. I leave it to the real experts to decide what they are.

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We are in a really bad position.  The banks are complicit in much of this behavior.  If the banks go, there will be blood.

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29 minutes ago, Lobo said:

I think we can escape the inherent political discussion baked into this and just discuss freely/economically...what exactly was the strategy during a massive bull-market run-up of individual equity issues, to leverage yourself without a commensurate earnings growth trajectory, with which to buy back your own stock...to what ends?  

Or is this when we finally discover what staying public serves one purpose above all others...to get bailout money/cheap credit in times like this (and so many before it)?

I'll never understand American's fascination with being publicly traded?  Oh right yeah...access to capital.  Because that's impossible otherwise, right?  

It's pure greed regardless of political affiliation.  Most of these corporate leaders have no moral compass.  They exist for the quickest route to riches without strings attached.  We need to make them pay.

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1 minute ago, Buzzrock said:

 

He is not referencing the horses that have escaped the barn.  They need to be hunted down and prosecuted and I am a conservative.  I knew this was happening under Obama and now Trump.  Nothing changes.

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5 minutes ago, 2300 Nueces said:

He is not referencing the horses that have escaped the barn.  They need to be hunted down and prosecuted and I am a conservative.  I knew this was happening under Obama and now Trump.  Nothing changes.

It's been happening forever.  Stock buy backs have occurred for as long as there have been corporations.  Depending on how it's executed, it can be like a dividend.  There's nothing inherently corrupt about it.

They received quite a bit of attention after the tax cut because it seems like a lot of corps did that with the windfall.

But the problem is not share repurchases, per se.  It's officers and directors unduly concerned with the stock price at the expense of other considerations.  And that is manifested in many ways other than stock buybacks.

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5 minutes ago, TwiceHorn said:

It's been happening forever.  Stock buy backs have occurred for as long as there have been corporations.  Depending on how it's executed, it can be like a dividend.  There's nothing inherently corrupt about it.

They received quite a bit of attention after the tax cut because it seems like a lot of corps did that with the windfall.

But the problem is not share repurchases, per se.  It's officers and directors unduly concerned with the stock price at the expense of other considerations.  And that is manifested in many ways other than stock buybacks.

Let them buyback stock with profits.

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We desperately need to bail out basically everyone living paycheck to paycheck. Give them the money. I know that's in the works, but it needs to happen fast. That, and perhaps a freeze all mortgage payments.

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"I don't want this to be political."

*announces political leaning and proceeds into discussion about policy - the relevant root word*

 

I Do Not Think It Means What You Think It Means The Princess Bride GIF

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1 hour ago, 2300 Nueces said:

I don't want this to be political.  I would consider myself more conservative and would like to discuss the moral hazard of bailing out corporations that have been buying back stock with debt for a decade.  Many corporations will want to receive a government bailout while purchasing company stock for the purpose of paying large bonuses to company executives.  This is a moral hazard and these companies should not receive a bailout.  These executives should be jailed for corruption in my opinion.  Get ready because this is about to happen.  Many of these CEO's were "retiring" in January.  Hmmmm.....

 

1 minute ago, gmr548 said:

"I don't want this to be political."

*announces political leaning and proceeds into discussion about policy - the relevant root word*

 

I Do Not Think It Means What You Think It Means The Princess Bride GIF

Pretty much. 
 

go to the cloak room asshole 

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Posted (edited)

Bailouts? No. Most Corporations  chose to use their profits for share buybacks/dividends instead of saving for the next recession.  Shareholders give and taketh. Adam Smith is a mother fucker.
 

no interest /below market federal loans? I’m open to conversations to options to protect the overall health of the economy.

Edited by Bateshorn

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39 minutes ago, Bateshorn said:

Bailouts? No. Most Corporations  chose to use their profits for share buybacks/dividends instead of saving for the next recession.  Shareholders give and taketh. Adam Smith is a mother fucker.
 

no interest /below market federal loans? I’m open to conversations to options to protect the overall health of the economy.

C-corps actually cannot save retained earnings for a recession.

Accumulated Earnings Tax

 
 Updated Feb 27, 2020

What Is an Accumulated Earnings Tax? 

An accumulated earnings tax is a taximposed by the federal government on companies with retained earningsdeemed to be unreasonable and in excess of what is considered ordinary. Essentially, this tax encourages companies to issue dividends, rather than retain their earnings. The IRS allows for certain exemptions to the tax rule.

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Posted (edited)
1 hour ago, 2300 Nueces said:

Let them buyback stock with profits.

Umm, that's usually what they do?  Less tax, more profit, buyback shares.

If you are talking leveraged share repurchase, where debt is incurred, that's another critter.  But they pay a balance sheet penalty for that.

Normal share buybacks are accomplished with earnings.

Edited by TwiceHorn

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They have to restore everyone’s retirement account balances back to what they were on January 15th or so.  Then they can have some bailout money.  Maybe.  

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I'd be cool with low/no interest loans. If you have financial problems you go to your bank for a loan. I'm not a fucking ATM machine. Once again airline management will want their front line employees to fund their mistakes while they waltz away with 50MM dollar parachutes. 50 percent cuts are already being floated. Not a fucking penny. Did that 18 years ago and still haven't recovered.

Every employee could work for free and it wouldn't matter. Revenue, not cost is the problem now. Revenue is a management problem. Mother U is burning about 100 million per day every day right now. Shut it down for 4 to 6 weeks and reevaluate. We're just burning fuel at this point.

I know we all hate the airlines. No one hates them more than me, but every single one on the planet is going to the dust bin of history without government intervention. Every. Single. One.

I know Penelope and the rest of the Surly 1 percent doesn't want to drive to Gulf Shores for vacation for the rest of their lives. We are going to have to help every service industry job for now, and fundamentally change the way they do business going forward.

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27 minutes ago, Incredulity said:

C-corps actually cannot save retained earnings for a recession.

Accumulated Earnings Tax

 
 Updated Feb 27, 2020

What Is an Accumulated Earnings Tax? 

An accumulated earnings tax is a taximposed by the federal government on companies with retained earningsdeemed to be unreasonable and in excess of what is considered ordinary. Essentially, this tax encourages companies to issue dividends, rather than retain their earnings. The IRS allows for certain exemptions to the tax rule.

They can, but they pay an exorbitant tax (20% hahaha) on excessive accumulated earnings.  And they're only excessive if for no other purpose than to avoid shareholder taxation.

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To be fair, OP did say that corps have been buying back shares with debt forever.  That is possibly true, but I would need some evidence to believe that it is some sort of standard practice.

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1 minute ago, TwiceHorn said:

They can, but they pay an exorbitant tax (20% hahaha) on excessive accumulated earnings.  And they're only excessive if for no other purpose than to avoid shareholder taxation.

Correct, I should of said they don’t, not can’t. The tax code encourages dividends.

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2 hours ago, DaysOff said:

I'd be cool with low/no interest loans. If you have financial problems you go to your bank for a loan. I'm not a fucking ATM machine. Once again airline management will want their front line employees to fund their mistakes while they waltz away with 50MM dollar parachutes. 50 percent cuts are already being floated. Not a fucking penny. Did that 18 years ago and still haven't recovered.

Every employee could work for free and it wouldn't matter. Revenue, not cost is the problem now. Revenue is a management problem. Mother U is burning about 100 million per day every day right now. Shut it down for 4 to 6 weeks and reevaluate. We're just burning fuel at this point.

I know we all hate the airlines. No one hates them more than me, but every single one on the planet is going to the dust bin of history without government intervention. Every. Single. One.

I know Penelope and the rest of the Surly 1 percent doesn't want to drive to Gulf Shores for vacation for the rest of their lives. We are going to have to help every service industry job for now, and fundamentally change the way they do business going forward.

The thing is that most airlines were very well positioned to handle a normal recessionary period with ample liquidity and assets on hand. You’d be laughed out of the building if you told the C suite of any industry that they had to have enough cash on hand to survive a near instantaneous mass panic lasting 3-4 months resulting in a de facto shutdown of their product followed by what will probably be a complete shutdown by the government for a portion of that time. In fact, keeping hat kind of cash on hand prior to this would be viewed as merger/acquisition bait. 

Having said that, the gold standard moving forward might be to have that kind of liquidity on hand. It’s certainly encouraged in our personal lives. Perhaps Donny T’s bailout money will have strings attached requiring that rainy day account to be fully funded to some benchmark like the current scenario before repaying the low interest loans that are about to be handed out. 

 

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I think the question is how to you bail out everybody? There is no one not affected, everyone in the country outside of the health care industry is going to be hurting. I really don't know the answer, but this is devastating for so many people. 

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10 hours ago, TwiceHorn said:

Umm, that's usually what they do?  Less tax, more profit, buyback shares.

If you are talking leveraged share repurchase, where debt is incurred, that's another critter.  But they pay a balance sheet penalty for that.

Normal share buybacks are accomplished with earnings.

Actually, they have been borrowing from the banks to buyback stock.  That's why they need a bailout.

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Posted (edited)

Funny how a group that is so vocal and quick to condemn others for unequal pay and greed......gets a pass for being the worst offender. Contact labor. Expected unemployment furloughs built in to contracts, but still paying actors  Millions for a couple months or work plus residuals. 
 

It’s about time a light was shinned on the extreme hypocrisy and projection coming from these idiots mouths. Let Harvey Weinstein and Captain America cut a check. 
 


Entertainment industry workers lose 120,000 jobs, call for federal assistance
 

https://www.google.com/amp/s/www.hollywoodreporter.com/amp/behind-screen/estimated-120000-iatse-jobs-lost-pandemic-1285229

Edited by ChickenSandwich

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11 hours ago, TwiceHorn said:

It's been happening forever.  Stock buy backs have occurred for as long as there have been corporations.  Depending on how it's executed, it can be like a dividend.  There's nothing inherently corrupt about it.

They received quite a bit of attention after the tax cut because it seems like a lot of corps did that with the windfall.

But the problem is not share repurchases, per se.  It's officers and directors unduly concerned with the stock price at the expense of other considerations.  And that is manifested in many ways other than stock buybacks.

Jesus christ this.  Stock buybacks are not inherently good or bad.  Like tax law, or regulations, it's how they are utilized.  Especially in the cloud we are under now.  Example:  growth potential is low but a company has excess cash, management may decide to return some of that value to the shareholders.  Happens all the time.  You are concentrating shareholder value rather than diluting it.  Or it's signaling - as it does indicate a favorable attitude towards shareholders by company management and an ability to generate profits that can be used to buy back stock.  There is a myriad of reasons.  

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As long as they tie bailouts to keeping and paying all of their staff then I don't see an issue.

Otherwise I am not sure what a bailout is needed for if companies are allowed to keep money and lay off half of their staff (beyond enriching shareholders etc)

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10 hours ago, Incredulity said:

C-corps actually cannot save retained earnings for a recession.

Accumulated Earnings Tax

 
 Updated Feb 27, 2020

What Is an Accumulated Earnings Tax? 

An accumulated earnings tax is a taximposed by the federal government on companies with retained earningsdeemed to be unreasonable and in excess of what is considered ordinary. Essentially, this tax encourages companies to issue dividends, rather than retain their earnings. The IRS allows for certain exemptions to the tax rule.

There are ways around that. Apple and Alphabet both have huge piles of cash offshore. Sure, you’d have to pay taxes on it if you brought it home, but both are well positioned to weather the coming storm. 
 

again: government should help with loans during these difficult times, be a lender of last resort. But creative destruction is the corporate muse we chose and her song we will sing.

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Just now, Bateshorn said:

There are ways around that. Apple and Alphabet both have huge piles of cash offshore. Sure, you’d have to pay taxes on it if you brought it home, but both are well positioned to weather the coming storm. 
 

again: government should help with loans during these difficult times, be a lender of last resort. But creative destruction is the corporate muse we chose and her song we will sing.

Government dictated shutdown due to a virus isn't "creative destruction".

Apple creating the iPhone and killing the Blackberry is creative destruction.

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1 minute ago, Incredulity said:

Government dictated shutdown due to a virus isn't "creative destruction".

Apple creating the iPhone and killing the Blackberry is creative destruction.

You can’t tell the American citizen: tough shit, shoulda saved, and then turn around and cry help for business that chose not to do what was necessary to plan for a black swan. 
 

i work a block off of K street.  I didn’t see any corporate lobbyists in my meetings with Ways and Means in 2017 asking for changes to the tax code to allow their clients to hoard cash or bring in overseas profits to shore up the balance sheet. 

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2 minutes ago, Bateshorn said:

You can’t tell the American citizen: tough shit, shoulda saved, and then turn around and cry help for business that chose not to do what was necessary to plan for a black swan. 
 

i work a block off of K street.  I didn’t see any corporate lobbyists in my meetings with Ways and Means in 2017 asking for changes to the tax code to allow their clients to hoard cash or bring in overseas profits to shore up the balance sheet. 

Who is telling American citizens tough shit?

 

 

 

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3 minutes ago, Bateshorn said:

You can’t tell the American citizen: tough shit, shoulda saved, and then turn around and cry help for business that chose not to do what was necessary to plan for a black swan. 
 

i work a block off of K street.  I didn’t see any corporate lobbyists in my meetings with Ways and Means in 2017 asking for changes to the tax code to allow their clients to hoard cash or bring in overseas profits to shore up the balance sheet. 

Nobody is saying or doing this.  Checks to families.  UE options.  From the agencies - informal forbearance options to help people keep their houses BEFORE they fall behind on payments.  Freezing reporting to the credit agencies so late payments are not showing up.  Easy to qualify reverse mortgages for those with equity.  There are tons of options being put forth on the corporate and individual level.  What will cripple the economy will be access to capital, as was the case in 2008.  

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2 minutes ago, Incredulity said:

Who is telling American citizens tough shit?

 

 

 

I guess you are unfamiliar with the way this administration has been treating low income workers for the last 3 years. 

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2 minutes ago, BabaYaga said:

Nobody is saying or doing this.  Checks to families.  UE options.  From the agencies - informal forbearance options to help people keep their houses BEFORE they fall behind on payments.  Freezing reporting to the credit agencies so late payments are not showing up.  Easy to qualify reverse mortgages for those with equity.  There are tons of options being put forth on the corporate and individual level.  What will cripple the economy will be access to capital, as was the case in 2008.  

This is my point at the corporate level:  make sure companies have access to capital if they need it.  But don’t fucking give it too them.  They can borrow it like everyone else that’s having a hard time and pay it back in due time.

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