David Korten: The Great Stock Scam

[marmar]

from YES! Magazine:




The Great Stock Scam
David Korten: Stock sales are supposed to help finance dividends or productivity improvements. But the numbers tell a different story.

by David Korten
posted Jun 06, 2011


We think of stock sales as ways for households to invest and for corporations to raise capital. But if you dig into the numbers, something very different is going on.

In 1999, according to corporate-ethics guru Marjorie Kelly in The Divine Right of Capital, the public sale of newly issued corporate common stock netted $106 billion—in other words, less than 1 percent of the $20.4 trillion in corporate shares traded in that year went to the corporations that issued them.

Even more surprising, Federal Reserve data reveal that from 1981 to 2000, the overall net flow of money to corporations from stock sales was a negative $540 billion, meaning that corporations spent more money from their treasuries to buy back their own shares than they raised by selling new shares.

One might wonder why corporate management would use company money to buy back its own shares, rather than use it either to pay dividends to their shareholders or to invest in new productive capacity. ...............(more)

The complete piece is at: http://www.yesmagazine.org/blogs/david-korten/the-great-stock-scam

[cbdo2007]

1. Hmmm.....so far it doesn't sound like the author knows very much about business or....

the stock market. Therefore I won't bother clicking on the link and wasting any more of my time.

He should look up Peter Lynch though and discover the reasons behind stock buybacks.

[marmar]

2. But you felt compelled to respond anyway.

nt

[girl gone mad]

3. k & r

From someone who knows a lot about business and the stock market.