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  • Fed Vow Boosts Debt Binge While Borrowers Cut Thousands of Jobs

    From bnnbloomberg.ca

    Soon after the Federal Reserve’s March 23 assurance that it would make borrowing easier for American corporations, Sysco Corp. sold $4 billion of debt. Not long after that, the food-service giant announced plans to cut one-third of its workforce, more than 20,000 employees. Dividends to shareholders would continue, executives said. That process repeated itself in April and May as the coronavirus spread. The Fed’s promise juiced the corporate-bond market. Borrowing by top-rated companies shot to a record $1.1 trillion for the year, nearly twice the pace of 2019. Companies as diverse as Sysco, Toyota Motor Corp., ... (full story)

This is the essence of what is wrong with the financial system. And why the big FED spending does not ever get to create demand. They start from the top and hope it rains down. But it does not rain. Its disgusting to read that the aid indirectly funds dividends and share buy back programs while millions of workers are laid off. Really responsibility should go both ways and society should only back corps that take their responsibility seriously.
I think we will reach new stock market highs to coincide with Donald Trumps re-election.

With all the far left acftivists out in force it would not suprise me to see a 2nd wave of the virus. More stimulus will be signed off and pumped into the markets.

Trump will also be able to blame the 2nd wave and resulting deaths on the left/Dems. If he leads in the polls this will also be bullish for the markets.
Quoting Vancarbon
Putting explicit conditions on program beneficiaries would make the central bank “a weird hybrid of the Federal Reserve, Treasury, BlackRock and an activist stockholder.” BlackRock Inc. is the world’s biggest money manager and was hired by the central bank to assist with bond programs. Through the Main Street facilities, which are scheduled to begin operations any day, the Fed will buy as much as $600 billion in four-year loans made to companies by commercial banks with principal and interest deferred for one year. Looks like the markets have front...
I heard a proposal/idea yesterday from a contributor on a BBC business program..
I wasnt listening properly and only picked up half way thru>>
But the gist was this.
No free bailouts. All bailouts to be given only on basis of at-market dilution of existing debtholder and shraeholder stakes. No more FREE LUNCHES for debtors or shareholders who've made a bad bet.
Everyone takes a haircut. Thats capitalism NOT socialization of corporate debt.

HOWEVER.. this smacks of nationalization and I prob like you, am really really not a fan o that model.
So how about these debts/and stakes be deposited to a TOTALLY INDEPENDENT Sovereign Wealth Fund.. Totally and by constitution guaranteed at arms length from Government.
Lots of countries have such funds.
( I recently discovered the US State of Alaska has such a fund... the earning from which are paid annually to each and every Alaskan-- yes I was amazed too)
Ok ok ok.. havent thought too much it and can already think of a dozen problems..
but its an interesting idea to muse over the weekend..
Warning: A Dangerous Subversive: 1% of comments CoCed
Quoting RossEdwards
{quote} I heard a proposal/idea yesterday from a contributor on a BBC business program.. I wasnt listening properly and only picked up half way thru>> But the gist was this. No free bailouts. All bailouts to be given only on basis of at-market dilution of existing debtholder and shraeholder stakes. No more FREE LUNCHES for debtors or shareholders who've made a bad bet. Everyone takes a haircut. Thats capitalism NOT socialization of corporate debt. HOWEVER.. this smacks of nationalization and I prob like you, am really really not a fan o that...
And the earning in this fund can then be reserved for the ones who are laid off.
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  • Posted: Jun 5, 2020 6:00am
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     Newsstand
    Category: Fundamental Analysis
    Comments: 4  /  Views: 4,500