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0 pointssonnyblarney7y ago0 comments

"Stock buybacks done with these tax cuts, enriching shareholders, does little to stoke economic demand."

Stock buybacks don't 'enrich' anyone. Money that is owned by investors goes from 'inside the company' to 'outside' and it 's superficially a net neutral transaction.

What those buy backs do do however is free up capital to be used in more intelligent ways than can be used by the single entity, in this case Verizon, who may not have any great ways to invest it.

Tax cuts probably have not directly affected companies just yet, but the signalling value of it, and that Trump is believed to be a 'pro business' guy (minus trade wars) is at least partly buyoing the economy by providing a dose of faith.

Though stocks are staggering a little because there's fear of no more upside ... there's no real fear yet as no reason for anything to burst. Though a major China trade war - or - a serious setback in China could make a serious correction.

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tracker17y ago

I think the trade war with China was inevitable. Not to say the U.S. doesn't or hasn't used state resources to bolster business, China does it to an extent that no other country has or could. Given the U.S. labor market and cost of said labor by comparison, it's about the only way to even attempt preserving that pool.

Yes it will make things more expensive, it will probably also cycle a faster upswing in demands for higher pay (also well overdue). But things will balance out in the end. My larger hope is to see some of the more overt corporatism recede quite a bit. Particularly IP terms and reform.

sonnyblarneyOP7y ago

The US has been in a 'trade war' with China since the 1980s.

But it's been a 'frog in warming to boiling water' type scenario.

By that I mean - the protectionism, corruption, IP theft etc. has been going on forever - it's just that we didn't care.

Actually - we didn't mind - because a backwards mess of a poor economy might want to do 'whatever it takes' to move forward.

Everyone (well most) was very happy to see China come out of the doldrums. It's better for everyone, generally.

But now that they are reaching for advanced economy status ... the 'issues' become ever more apparent.

I don't like Trump one bit, I find him kind of nauseating in his demeanor - and - I'm not even sure his manner of approach to the 'war' is right.

BUT - 100% of politicians are otherwise incapable of standing up to China. Ironically, it just mike take a loose-cannon douche-bag to do it.

'The West' speaks with 1000 voices: CEOs, NGO leaders, politicians, bureaucrats, federal/state, different countries within federal entities (i.e. EU), heads of Universities, research establishments.

China speaks with 'one voice' and they have a plan, which can actually be carried out.

So if anyone tries to stand up to them, China can scare that 'little individual' with all sorts of things, and by 'little individual' I even mean heads of state.

But ironically, in totality, Western powers do have the upper hand, both because of the direction of trade, but also because of the size of economies, sophistication, all sorts of other reasons.

Example: Trudeau in Canada will mollify Chinese and would be afraid to do anything because China could threaten to not buy Canadian commodities. But here's the thing: they are commodities! So if China stops buying hardwood from B.C. and starts buying it from elsewhere, then as prices receded in Canada and prices increase 'elsewhere' - other buyers come to B.C. for hardwood.

China buying a commodity is like them scooping water out of a river -> it doesn't matter who buys what, the aggregate demand is the same.

But the interim calamity and fear from China walking away will push Canadian CEO's to make Trudeau cede whatever to China.

As an example.

NPR just had an interview with the Robert Lighthizer [1] who talks about the fact China has been saying they'll 'do things' on IP for over 20 years but they've done nothing really. These talks are the first time basically ever that the US is speaking with credibility in terms of actual response/retaliation.

I suggest the Chinese are just waiting for Trump to be out of office, or to give him something political to show for it, and then going back to normal. I would be ideal if the US political org. got together with the EU, Japan, S. Korea, India and Australia ... and made a coordinated, long term effort on these issues. It would actually be better for everyone - even the Chinese, in the long term.

[1] https://www.npr.org/2018/12/07/674730823/u-s-trade-represent...

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