Posted on 12/08/2017 11:10:51 AM PST by spintreebob
With unemployment low and demand for new homes high, a company like Home Depot could be spending most of its surplus billions on raises for workers or the rollout of new stores.
Instead, it is using $15 billion to buy back shares of its own stock, a move that will reward shareholders including chief executive Craig Menear.
Home Depot’s statement was a reminder that corporate America may have other plans for that cash.
Several companies already have indicated that they will use excess funds to pay off debt, increase dividend payments or repurchase their own shares rather than create new jobs or raise wages. the consensus is that workers will be last in line.
The chain’s founder, Bernie Marcus, was among President Trump’s staunchest supporters during the 2016 campaign, once writing that “the fate of this nation” depended upon his election.
Now, the White House website features a Marcus opinion piece praising the tax cut as “the gift that keeps on giving.” Home Depot last month issued a statement praising the plan for “improving the competitive position of companies so they can create more jobs.”
Several corporations, including AT&T and CVS Health, have publicly touted plans to funnel tax savings into new spending on equipment or hiring. The telecom giant has vowed to boost its annual investment next year by $1 billion, about a 4 percent increase from last year’s $22 billion total.
Over the past five years, companies in the Standard & Poor’s 500-stock index spent $2.6 trillion acquiring their own shares. Information technology companies such as Google’s parent company Alphabet led the way with big banks such as Wells Fargo and Citigroup close behind. Dozens of companies so far this year, including marquee names such as Apple, JPMorgan Chase and Boeing, have spent big on their own stock.
(Excerpt) Read more at washingtonpost.com ...
Wow..What convoluted gibberish. You should have worked for Obama.
Snowflakes at the Washington Post are soooooo pathetic.
Can we assume the writer has a difficult time balancing his own check book?
Bet on it.
Great, now that your sphincter is pinched up like Pelosi’s smile, you went on a tirade railing against HD’s plan to buy back stock. This is one of the arguments that triggered Pelosi into to a public meltdown over the tax cuts.
So, do you agree with the walking plastic dildo?
Kinda. But not everyone is in the 'market'. Trump argued that Obamas stock boom didn't contribute much to the economy. We shall see if this one will, or like in the past years that worker productivity will continue to increase, and still have wage stagnation.
I've seen it. I've also read studies which show that a growing percentage of companies prefer to leave an open position open rather than raise their starting salary to attract candidates to fill it. The tax bill is not going to be a massive job creator and it isn't going to result in higher salaries. People might as well accept that.
On the public side, there is no disputing that certain public works projects return huge dividends. The interstate system is a fine example, but military/science programs tend to yield much higher returns. On the private side, the principles described by Adam Smith are very much in evidence. Allow competition between those pursuing their own self interest, and net benefits accrue to everyone.
The Trump tax cuts address this same question: who best utilizes scarce resources? Right now, the main emphasis of government is transfer payments, so the obvious answer is private enterprise. Once returns remain in the private sphere, it matters not a whit in which manner they are saved/stored/spent. If a corporation decides to manage its share prices by periodic buy backs, they are in effect signalling to the market that they expect lower growth.
As a result, while the share prices may indeed rise due purely to mechanics, the 'smart' money will gravitate and migrate to other concerns that are investing in expansion. Secondly, unless money is buried, it remains in the overall financial system. If shares are held in trust but increasing in value, they will - and are - lent out on margin to others. This has an effect of increasing the overall money supply, which in turn drives new investment by those seeking infusion of capital.
To recap, the key is what do with some fish and loaves of bread. Properly invested, they can generate returns many times the original source. Given the right public program(s), governments throughout history have engineered significant periods of growth. Financing & supporting research universities is one of the oldest and time tested techniques.
I don’t follow Pelosi as close as you do. I generally ignore her. Again, my positions are mine.
This is not complex. Even you should get it.
All of which put cash back in the hands of investors who will reinvest the money in areas they think have highest potential for returns.
Anything that raises capital for a company, contributes to profits and losses, or helps a company be more solvent or in a better financial position overall, is helpful to the economy.
I believe that churning itself, contributes to the economy.
Investment firms get paid when stocks trade hands. This is a means of developing capital.
I think it’s mistake to think of stock as just a place to park money.
Dividends are paid out also, so again there is an increase of expendable income.
No reason for Home Depot to pay its workers more than it needs to get the caliber it requires. (Though I’d argue it comes up short on that front generally for its more urban stores.)
As the demand for employees heats up because of increased economic activity (and, hopefully, increased deportation of illegals), then HD will need to pay more and it will.
Funny how markets work.
If you raise the rate from 20% to 35%, wouldn't you expect that some jobs would disappear?
And if you lower the rate from 35% to 20%, by what magic would jobs fail to appear?
Does the author of this article think that stockholders in Home Depot who agree to sell their shares back to the company are just going to set fire to the money? Or will those shareholders invest in other companies that will use the money? Or will they purchase goods and services that might not otherwise have been purchased, thus boosting the employment needs of other companies?
What liberals don't know about capitalism is a LOT!
Yeah it surprises me too.
I've certainly seen that.
I've also been employed by a company which was growing by over 50% per year for several years. After moving into a new location, the company found itself with a need to hire a thousand employees quickly, choosing from 9000 applications.
Companies pay the COST of labor for labor. They only hire when the VALUE of labor is higher than the cost.
You’re drooling.
True. But often the value that companies place on the labor and the value that labor places on itself are different.
That the best you can do newbie? Listen, anytime ya want your bell rung again, ping me! I’ll accommodate you! No problem.
Even the morons at the Compost must know this.
But of course, they ignored it so as to slant the news as they wanted it to be misinterpreted.
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