Monday, October 3, 2016

Your Tax Money Could Enrich Corporate Executives

The latest idea for government to improve the economy came from insider Larry Summers, who long ago sided with those in power vs. serving the public.  Summers floated a trial balloon for the government to buy stock on an ongoing basis.

My initial reaction was revulsion, after which I pondered how Larry's idea would help the greed and power class.

1.  Most executive compensation involves stock options which need rising share prices for the C suite to get millions more in pay.

2.  Companies engineered earnings increases by buying back stock and reducing the float.  Should they wish to re-float treasury stock they'll need buyers.

3.  Private equity underwriters (PEU) need investors to buy stock in companies they monetize via IPO.   Also, most PEUs sell but a portion of their holdings in the initial offering.  Rising stock prices enable them to make the maximum in their final profitgasm exit.

I'm sure there are more reasons for the government to buy company stock to enrich corporate chiefs and their PEU sponsors.  That's the insider group Larry Summers serves.  The call for government to buy equities grows louder.