just about every S&P 500 company has bonds out there. Do you think they issued those bonds knowing full well that they are just borrowing from future shareholders? They hope their debt is intelligent, and will improve future earnings for the shareholders. But they are in the business to make a profit. The government can't even break even. Krugman wants to run the government like a business. What do you think? Should the government be run just like a business?
Right. And the fact that many of those "intelligent" companies that issued debt to buyback shares of stock at all-time high prices did it for other than the reason that they were incentivized on share price, right? Because I'm just a dumb finance guy, but when I remember talking about debt in school, it was issued to do things like modernize infrastructure, buy competition, launch new products, etc. I must have missed the chapter on issuing debt to buy back stock at highs. Was that the same chapter on "intelligent debt"?
Tsing, you probably fell asleep in your WACC class, or stock buy backs financed by debt would at least be familiar to you. Debt is not inherently good or bad, like most things, it depends on the price. If the US Gov't can borrow for 0%, then they should and spend that money on increasing future production potential (roads, freeways, high speed rail, r&d, education).
How embarrassing. Had they let this one slip by: Perry Bullock @PerryBullock Aug 22 @jimcramer @SuzeOrmanShow Yea let's keep those printing presses going !!! Especially in an election year, we must help Hillary.
Maybe you were asleep during the reading of my post? Allow me to highlight the words that were most important as a general service. "I must have missed the chapter on issuing debt to buy back stock at highs"
it's not high if you think it's going higher. Why not issue a warning to everybody to never trade on margin? same thing