Juggling Dynamite

Danielle was a guest with Kerry Lutz on The Financial Survival Network, talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

Borrowing heavily to spend beyond income and speculate on asset prices has been a global compulsion over the last 20 years.  When banks and big corporations blow up on reckless risk-taking they’ve received bail-outs from governments funded by taxpayers and more debt.  When households blow up there’s little help to offer and deep recessions tend to follow.  Australia and Canada are facing similar challenges today for similar reasons, with no easy out in sight.  This video report offers a good update on the Australian cycle and a heads up for Canada in 2019.

Down, down prices are down in the property market in Australia. Thousands of houses that should have sold last year are still unsold in early 2019.  Here is a direct video link.

There are so many compelling reasons to ban share buybacks as the destructive, wasteful, market manipulation that it is–the egregious abuse of trust by insiders selling their shares into the artificial buying strength created is just one.  Ethics must be demanded by legislation, regulation, enforcement and prosecution of the individual directing minds behind the corporate veil.  See SEC commissioner’s report reveals a ‘very troubling’ pattern in stock buybacks and insider selling:

“If executives believe a buyback is the right thing to do, they should hold their stock over the long term. Instead, we found that many executives use buybacks to cash out. That creates the risk that insiders’ own interests — rather than the long-term needs of investors, employees, and communities—are driving buybacks,” Jackson wrote.

What’s more, Jackson found that the stock price of those companies underperformed in the long run. Specifically, companies with insider sellers underperform other companies by more than 8 percentage points, Jackson’s research found…when executives sell into a buyback, the buyback is more likely to produce a short-term. stock-price pop rather than a long-term, sustainable value increase. The difference in performance between buybacks with executive cashouts and (those without is meaningful: ninety days after the buyback announcements, firms with insider cashouts underperform the other firms we study by more than 8%.”