Saturday, August 22, 2009

BusinessWeek Cover Story on Optimism

Interesting Special Report containing multiple pieces on Business/Economy optimism in the latest issue of BusinessWeek Magazine.

The lead story is "Why It's Smart To Be Optimistic" and contains lots of good points around reasons to practically be thankful for the recent economic problems... ranging from laid off people starting new ventures to the increase in education as people prepare for a different future. Really good points all contained within.

The final page essay (thankfully not written this week by Obama critics Jack & Suzy Welch) is also very interesting, and unfortunately, almost a counterpoint to the "cause for optimism" from the prior piece. "The Buyback Boondoggle" is penned by William Lazonick and details the lavish amounts of money spent by corporations on stock repurchases.

Lazonick brings up three excellent points about this practice.

- First is that the money is often spent at the expense of jobs... with companies buying back large of amounts of stock at the same time employees are being laid off.

- Second is that it can be done by a corporation for the sole intent of raising the stock price... which can lead to an interesting question as public companies are legally chartered with maximizing value to shareholders, but that often can wind up more short than long term.

- Third is that when companies buy back stock on a large scale, the largest beneficiaries can wind up being executives of the company with options to exercise.