"According to the most recent Capital IQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P 500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!
"Should the Q1 pace of buybacks persist into Q2 which has just one month left before it too enters the history books, the LTM period as of June 30, 2014 will be the greatest annual buyback tally in market history." (Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter, Zero Hedge)
Why are companies buying shares of their own stock, you ask, when buybacks add no productive value to a company at all?
It's because it gooses stock prices which makes shareholders happy. It's a complete scam. And it's a huge scam, too. Currently, total stock buybacks represent a whopping $4 trillion or 20 percent of the total stock market value. Just think of the walloping prices are going to take when these same shareholders decide it's time to bail out? Look out below!
Now get a load of this clip from Action Forex:
"Disappointment over the pace of economic growth explains at least some of the downturn in yields. The U.S. economy very likely contracted in the first quarter of the year, perhaps by as much as 1.0% annualized ... Even with a strong bounce back in the second quarter " -- the average pace of growth in the first half of the year will be a tepid 2.0%, about the pace it's been since the end of the recession...
"The retrenchment in yields also reflects events abroad ... However, there is perhaps another reason for the decline in yields that is more pernicious. There is the realization that even after the recovery has run its course, economic growth is likely to be slower than it has been in the past. Slower growth means that as the fed funds rate eventually moves off the floor, it will not go back to the 5.25% it was prior to the Great Recession or even the 4.0% it averaged over the quarter of a decade prior. Expectations of "lower forever"...increasingly appear to be built into longer-term interest rates." (A year in the bond market, Action Forex)
Did you catch that part about "lower forever"?
What the author means is that the economy has reset at a lower level of activity and will not return to normal. This is an admission that the managers of the system have no intention of fixing what's wrong; cleaning up the banks, writing down the debts, regulating the system, increasing workers buying power (boosting demand) or providing sustained fiscal stimulus until unemployment and growth are back where they should be.
Instead, basic macro has been replaced with public relations, that is, a swindle that's spearheaded by faux-liberal icons Krugman and Summers who are pushing the "secular stagnation" folderol which is just a lame excuse for maintaining the status quo plus a few anemic add-ons, like infrastructure projects. Big whoop. It's all a fig leaf for maintaining the same wealth shifting monetary policies that are in place today.
So this is it? Are we really doomed to a future of high unemployment and slow growth?
The IMF seems to think so. Here's an excerpt from an article by Nick Beams which gives a rundown on a recent IMF report that was ignored by the media. The article is titled "No end to economic breakdown":
"Almost six years after the eruption of the global financial crisis, the International Monetary Fund has effectively ruled out any return to the economic growth rates that preceded September 2008.
"Two major chapters of the IMF's World Economic Outlook ... provide a gloomy assessment of the state of the world economy. In the advanced economies, investment is falling as a proportion of gross domestic product (GDP), while in the 'emerging markets,' there is no prospect for growth rates to return to pre-2007 levels.
"The IMF notes that real interest rates have been declining since the 1980s and are 'now in slightly negative territory.' But this has failed to boost productive investment. On the contrary, what it calls 'scars' from the global financial crisis 'have resulted in a sharp and persistent decline in investment in advanced economies.' Between 2008 and 2013, there was a two-and-a-half percentage point decline in the investment to GDP ratio in these countries. The report adds that ratios 'in many advanced economies are unlikely to recover to pre-crisis levels in the next five years.'
"This conclusion is of immense significance given the critical role of investment in the functioning of the capitalist economy. 'Investment' is the key driving force of capitalist economic growth ... But if investment stagnates or declines, the circle turns vicious. This is what is now taking place." IMF report: No end to economic breakdown (April), wsws
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