#alternate alternate New York Post WordPress.com Thanks for contacting us. We've received your submission. Back to Reading * News * Metro * Page Six * Sports * Business * Opinion * Entertainment * Fashion * Living * Media * Tech * Real Estate * Sub Menu 1 + Photos + Video + Covers + Columnists + Horoscopes * Sub Menu 2 + Classifieds + Subscribe * Sign in In The News: hillary clinton iran lamar odom 2016 presidential election new york mets Sections Search ____________________ (search) Sign in / Register New York Post Share this: * Facebook * Twitter * Google * WhatsApp * Email * Copy * John Crudele John Crudele Business Share this: * Facebook * Twitter * Google * WhatsApp * Email * Copy * Dear John: Stock buybacks are a big joke By John Crudele * View author archive * email the author * Get author RSS feed Name(required) ____________________ Email(required) ____________________ Comment(required) ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ Submit » April 12, 2015 | 1:56am Modal Trigger Dear John: Stock buybacks are a big joke Photo: AP MORE FROM: John Crudele John Crudele Dear John: Fed rigging is turning markets into casinos Combat Middle Eastern terror with an oil ultimatum The breakdown of December's extremely misleading job report Dear John: Courier standing firm on its fuel surcharge Is the US working hard or hardly working? Dear John: I just want to point out one thing: Share buybacks aren’t an accounting trick. They are announced and can clearly be seen on the cash-flow statement. From an investor’s standpoint — taxes not being an issue — one shouldn’t care if the dividend is increased or a buyback is used to return capital to shareholders. Cash is cash. However, using futures to manipulate markets is pure evil. This causes major distortions and much long-term harm. In no way should the Federal Reserve be propping up markets. In the end, the blowback is brutal, as it should be. Propping up markets is a short-term solution for long-term problems. B.S. Dear B.S.: You are referring to a recent column I wrote about the stock market being “rigged” and stock buybacks being part of the manipulations. OK, I get your point. But my point was this: Because of the way earnings per share are calculated (earnings divided by the number of shares outstanding), profits can be made to look better by reducing the number of shares in the public’s hands. Reduce the denominator of the equation and the product — earnings per share — looks bigger. And this is being done with company cash, so it’s no big deal. More important, the people spending this company cash — corporate executives — are benefiting because they undoubtedly own stocks. (Yes, other shareholders benefit as well.) As you probably know, there has been a massive amount of share buybacks in recent years. IBM has been the king of such buybacks. Yes, companies could raise cash dividends instead of buying back their own stock. But that does nothing to make profits look stronger, which is what Wall Street monitors. Or they could use their cash for neither buybacks nor dividend increases and instead spend it to expand their business. That’s what healthy companies do in a healthy economy. In an economy like this — which is weak but has a strong stock market — companies play tricks to justify the share price that is being helped by the overall rigged market. Everything we’ve mentioned here is legal. It’s not, however, a legitimate way to run a business or an economy. Dear John: You recently wrote about the accounting the Federal Reserve does on quantitative easing and how it gives its profits to the US Treasury. There’s one little point to clarify on the Fed’s accounting, which I’ve studied. Unlike private-sector businesses, the Fed doesn’t mark its portfolio to market, which is why it might be tempted to just hang on to the QE portfolio, as you noted. However, should the Fed take market value losses selling its portfolio, it doesn’t book the losses. It books them as a deferred asset. I know some venture-capital companies that wish they could do that! With the deferred asset, the Fed can’t be making contributions to the Treasury, but those are entirely phony anyway. The Fed is simply paying back to the Treasury the interest that originally is paid by the Treasury. Wonderful! Doug Dear Doug: Thanks for the lesson on the Fed’s shell game. As you know, the problem is that eventually, someone comes along and breaks up the game. In this case, foreign investors will eventually stop believing the US government financial numbers and will refuse to lend us money. Whether that happens anytime in our lifetime — or tomorrow — is anyone’s guess. (Recently I wrote a satire on the right of college athletes to be paid. I favor it. This is in response to that.) Dear John: It is against core American values and ethics to deny individuals the right to be paid for the value of their work. In fact, most Americans believe it is right to allow people to prosper for performance and achievement, so I find it strange that some feel it is OK to single out college athletes to be denied this right. Think of it this way: Which other group of full-scholarship or self-pay students are restricted from earning pay for the value of their work? If a English major learns writing skills then writes a best-selling book, he or she can earn whatever the market will pay … no caps or university restrictions. Same for most every other major. So why do some people want to single out the one group of students who actually bring significant money to the school to be denied rights afforded to everyone else? The “paying college athletes will ruin the game” claim is nonsense. Where is the data to support this? High-end college athletes en route to professional careers weeks after the last college game of the year are all but paid to play that season. For example, was the Jan. 12 college football national championship game ruined because Marcus Mariota was certain to walk off the field a multimillionaire and every pass completion almost guaranteed him more personal income in coming months? Still, if paying athletes will ruin the game for some fans, it is pretty arrogant and selfish to deny every athlete’s rights to pay just because select fans feel the game will be ruined for them. The moral high ground here is to allow college athletes to prosper for staying in school while numerous third parties make billions of dollars on the value of that students work. Shawn Fojtik, founder of FanAngel.com Dear Mr. Fojtik: I couldn’t have said it better. Share this: * Facebook * Twitter * Google * WhatsApp * Email * Copy * Filed under college athletes , dear john , federal reserve Share this article: Share this: * Facebook * Twitter * Google * WhatsApp * Email * Copy * Read Next Columbia University business class gets celebrity insight Read Next Columbia University business class gets celebrity insight Most Popular This Week 1 Suspects claim teen was having sex with father before alleged gang rape Suspects claim teen was having sex with father before alleged gang rape 2 The brutal secrets behind 'The Biggest Loser' The brutal secrets behind 'The Biggest Loser' 3 Nursing home boss bought winning Powerball ticket for worker Nursing home boss bought winning Powerball ticket for worker 4 Your penis pics are bush league Your penis pics are bush league 5 Dad was so drunk, he couldn't report daughter's gang rape Dad was so drunk, he couldn't report daughter's gang rape 6 Here's what Sean Penn agreed to do to party with El Chapo Here's what Sean Penn agreed to do to party with El Chapo Share Selection Trending Now in Business 1,833 Dear John: Stock buybacks are a big joke Dear John: Fed rigging is turning markets into casinos 1,396 Wall Street's familiar names appear on Showtime's 'Billions' 823 Hedge funds eye sweet gains on corporate loans Columnists John Crudele Dear John: Stock buybacks are a big joke Dear John: Fed rigging is turning markets into casinos Claire Atkinson Dear John: Stock buybacks are a big joke Wall Street's familiar names appear on Showtime's 'Billions' SEE ALL COLUMNISTS Now On How To Live Stream The NFL Playoffs 2016 For Free SEE ALL Now On Donald Trump’s brother Robert emerges Meet the sexy model who inherited her uncle Alec Baldwin’s anger issues SEE ALL More Stories Now On Page Six Donald Trump’s brother Robert emerges Now On Decider Is 'Making A Murderer' A Bunch Of Lies? Steven Avery's Ex Says Yes Now On IAF 2:49 Martin O’Malley Is The Coolest 2016 Presidential Candidate New York Post * Twitter * Facebook * Google Plus * 2015 Blessing of the Animals * Apps Help & FAQ * Columnists * Community Guidelines * Contacts * Customer Service * Fantasy Football Draft Calculator * Home Delivery * Home Delivery FAQ * Jobs * NYCFC Giveaway Terms * NYCFC Giveaway Thank You * Page Six Fashion Sweeps Terms * pagesixfashionsweeps-thank-you * Privacy * Privacy * Recommended for You * Reset * RSS Feeds * Search * Terms of Use * Terms of Use * Test Page * The Pascalizer * Verify © Copyright 2016 NYP Holdings, Inc. All rights reserved Terms of Use | Privacy * Sections & Features + News + Real Estate + Page Six + Tech + Sports + Media + Metro + Photos + Entertainment + Video + Business + Alexa + Opinion + Covers + Fashion + Horoscopes + Living + Classifieds * Apps, Alerts & More + Email Newsletters + Apps for iOS and Android + RSS Feeds + NYPost Store + Home Delivery o Subscribe o Manage Subscription o Customer Service * Help/Support + Customer Service + Search + Contact Us o Letters to the Editor o Newsroom Contacts o Reprints o Careers * Advertise + Media Kit + Contacts Post Digital Network * * * * © 2016 NYP Holdings, Inc. All Rights Reserved | TERMS OF USE | PRIVACY | YOUR AD CHOICES Powered by WordPress.com VIP IFRAME: //www.googletagmanager.com/ns.html?id=GTM-TWX9Z9 Send to Email Address ____________________ Your Name ____________________ Your Email Address ____________________ _________________________ loading Send Email Cancel Post was not sent - check your email addresses! Email check failed, please try again Sorry, your blog cannot share posts by email. Copy Share URL: ____________________ Copy Link Sign Up / Sign In Sign In // Sign Up With your existing account from... With your existing account {* loginWidget *} Use an account with your email address Or with a NYPost.com account {* #userInformationForm *} {* traditionalSignIn_emailAddress *} {* traditionalSignIn_password *} {* traditionalSignIn_signInButton *}{* traditionalSignIn_createButton *} {* /userInformationForm *} Sign Up / Sign In Sign In // Sign Up Welcome back, {* welcomeName *} {* loginWidget *} Or use NYPost.com account Sign Up / Sign In Sign In // Sign Up Welcome back Welcome back, {* welcomeName *} {* #userInformationForm *} {* traditionalSignIn_emailAddress *} {* traditionalSignIn_password *} {* traditionalSignIn_signInButton *} {* /userInformationForm *} Use an account with your email address Or use another account Almost Done! Please confirm the information below before signing in. Please confirm the information below. {* #socialRegistrationForm *} {* socialRegistration_emailAddress *} {* socialRegistration_displayName *} {* socialRegistration_ageVerification *} By clicking "Sign In", you confirm that you accept our terms of service and have read and understand privacy policy. {* backButton *} {* socialRegistration_signInButton *} {* /socialRegistrationForm *} Almost Done! {* #registrationForm *} {* traditionalRegistration_emailAddress *} {* traditionalRegistration_password *} {* traditionalRegistration_passwordConfirm *} {* traditionalRegistration_displayName *} {* traditionalRegistration_captcha *} {* traditionalRegistration_ageVerification *} By clicking "Create account", you confirm that you accept our terms of service and have read and understand our privacy policy. {* backButton *} {* createAccountButton *} {* /registrationForm *} Create a new password Forgot Password? Don't worry, it happens. We'll send you a link to create a new password. {* #forgotPasswordForm *} {* traditionalSignIn_emailAddress *} {* backButton *} {* forgotPassword_sendButton *} {* /forgotPasswordForm *} Create a new password Sent! We've sent an email with instructions to create a new password. Your existing password has not been changed. We've sent an email with instructions to create a new password. Close Account Already Exists {* mergeAccounts *} {* backButton *} Sign in to complete account merge {* #tradAuthenticateMergeForm *} {* traditionalSignIn_emailAddress *} {* mergePassword *} {* traditionalSignIn_signInButton *} {* /tradAuthenticateMergeForm *}