Stock Buybacks and Government Bailouts

A new coronavirus relief bill was introduced recently that includes preventing corporations from using taxpayer money for stock buybacks!
Why exactly? Well for example -

• Boeing has spent $44 billion on buybacks over the last six years - 74% of its free cash flow; it’s now seeking $60 billion in federal money
• Over 10 years, Airlines (American Airlines, Southwest, United, spent 96% of their cash flow on buybacks ($50 billion); they are now seeking $50 billion from the government.

Just staggering numbers...

So what is a stock buyback? Why do companies do buybacks, and why could it have adverse effects to the long term health of the company?

In this episode we talk about the history of buybacks, companies practicing it, previous bailouts such as the Troubled Asset Relief Program (TARP) which was a $700 billion government bailout, consequences of the bailouts and buybacks in aiding inequality and all time high C-suite/ executive salaries. Also where do employees and layoffs stand in such uncertain times?

Although it boosts the share price in the short term, buybacks in many ways limits the company's ability to have a rainy day fund to be prepared for recessions & Black Swan events such as the COVID-19 pandemic.

It’s time to do the right thing! Like Mark Cuban says "No buybacks. Not now, not a year from now, not 20 years from now. Not ever!"