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View Diary: Ordinary people losing trust in the economic system - and doing something about it (191 comments)

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  •  Buybacks have much to do with trading volume. (5+ / 0-)

    A company such as a bank will buy back its stock to keep the market valuation artificially inflated. This is a legal version of watering down stock.

    How might any bank behave when able to acquire funds from a central bank for free or nearly free? Quite a number of things in fact. A bank may borrow discounted money, then invest those monies that guarantee a return on the investment. A portion of the proceeds support the market value of a bank even when the market price is unwarranted.

    It is always interesting to note, if you know where to look, how much stock bank insiders dump on bad news. While I have no particular figures on HSBC – other major bank shareholders and similarly sized corporations have dumped stock in just this way nly to have the company buy the shares to float the price.

    This is, as you say, an insular system.

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