Companies Using Piles Of Cash To Buy Back Stock, Not Generate Jobs

[Joanne98]

For months, companies have been sitting on the sidelines with record piles of cash, too nervous to spend. Now they're starting to deploy some of that money - not to hire workers or build factories, but to prop up their share prices.

Sitting on these unprecedented levels of cash, U.S. companies are buying back their own stock in droves. So far this year, firms have announced they will purchase $273 billion of their own shares, more than five times as much compared with this time last year, according to Birinyi Associates, a stock market research firm. But the rise in buybacks signals that many companies are still hesitant to spend their cash on the job-generating activities that could produce economic growth.

Some companies are buying back shares partly because they don't want to invest in developing new products or services while consumer demand remains weak, analysts said.

"They don't know what they want to do with all the cash they're sitting on," said Zachary Karabell, president of RiverTwice Research.

http://www.commondreams.org/headline/2010/10/07

[Lint Head]

1. This proves that demand creates jobs not trickle down economics.

[RainDog]

3. people w/o jobs that pay living wages are not going to spend

it's that simple.

the robber barons broke the back of Uncle Sam.

[leveymg]

2. Stock buy-backs should be outlawed or temporarily suspended after layoffs.

That would be the most effective way to prompt corporations to hire back workers. Only then should they be allowed to prop up share prices.

[Scuba]

4. More wealth for the wealthy. And they want tax cuts???

[Skink]

5. I'd rather see my company control most of their voting rights.

having just been through a costly proxy fight with investors that were only interested in usurping our real estate. Investors with no interest in the companies employees I think companies have to do something to protect themselves from takeovers.

[some guy]

7. I'll jump in here

and lean toward agreeing with your view.

I'm also thinking buying back stocks might make it easier for companies to (at least have better opportunity to) become more humane and better "corporate citizens." Less ability for Wall Street to pressure them WRT quarterly earnings as the sole measure of business success.

It sucks that hiring is still stagnant, but maybe a glimmer of hope in the idea of corporations regaining control of themselves?

[bvar22]

6. Well DUH.

The ONLY people who believe that showering the RICH with Millions will cause them to create JOBS are in the Political Leadership of BOTH Political Parties.
(They don't really "believe" it...they just hope YOU will believe it.)