Wednesday, January 21, 2015

Peter Schiff warns on US corporation share buybacks

I recently read an article that almost 100% of all U.S. corporate earnings are being used to finance share buybacks and dividends. And yeah, the average age of our plant and equipment is the oldest it’s been in better than 60 years. So yeah, American companies have been sacrificing their long-term liability, you know, based on just trying to artificially enhance returns now. And a lot of U.S. companies are just taking on enormous amounts of debt, which is gonna make it that much harder to make these capital investments in the future, especially when interest rates rise and a lot of the debt, you know, is gonna have to be rolled over at much, much higher interest rates.

So yeah, that’s what’s going on in corporate America, it’s really a disaster, and the people are whistling by the graveyard and, you know, just focusing on share prices and not looking at, you know, what’s happening to boost those prices and how the actions that companies are taking today to boost their prices are gonna come back and bite them, and they’re gonna be the reason that prices are gonna fall so much, you know, certainly in real terms in the future.

Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009