23 Trillion is the United States Debt level.
So it is finally popping. The “Everything Bubble”. And again it will be followed by major bailouts. But not so fast…
With the coronavirus aka the beer virus the biggest hedonistic bull party funded on the back of a massive money printing program by the Federal Reserve, the United States Central Bank has finally stopped. On its way it has led to invincible entrepreneurs (Enron Musk), instagram influencers, WeWork and I am afraid to tell: Materialistic Trap music. You can’t argue with mumble rappers. And we still like to party do we?
Remember rescueing the banks in 2008? Not really? Neither do we… But now it seems the taxpayer will have to write another 1 Trillion USD bailout package for literally everbody. So who pays for this? Short answer: Future generations. Who gets rescued first? Airlines and Boeing. How could this happen? Simple. The airline CEOs spend 96% of free cash flows to buy back shares from 2010. Boiengs CEOs have spend whopping $43.4 billions USD for share buy backs. Instead of investing in the company…
So what are share buy backs and why is it problematic? Profitable companies can choose to reinvest their profits in the company, pay dividends or buy back their stocks on the stock exchange. In theory this reduces the shares outstanding and thus increases their price, and allows them to raise capital in the future. And why is it problematic? Because most CEOs have huge bonus schemes tight to the stock prices, which makes the stock buy back the shortcut to increase personal compensation. This money is then missing in the reserves for crisis like these or other profitable investments like research and development….
But does it really matter? We will bail them out. All of ’em.
Get rich or try dying… Stay Healthy