1/4
Alibaba (and others) are aggressively buying back shares. This may turn out in retrospect to have been a good strategy, but its worth remembering that large-scale share buybacks are highly pro-cyclical for the economy.
bloomberg.com/news/articles/…
Alibaba (and others) are aggressively buying back shares. This may turn out in retrospect to have been a good strategy, but its worth remembering that large-scale share buybacks are highly pro-cyclical for the economy.
bloomberg.com/news/articles/…
2/4
Buybacks, in other words, reinforce improvements in the underlying economy to the same extent that they reinforce further deterioration. By expanding leverage ratios they multiply gains for investors on the way up while multiplying losses on the way down.
Buybacks, in other words, reinforce improvements in the underlying economy to the same extent that they reinforce further deterioration. By expanding leverage ratios they multiply gains for investors on the way up while multiplying losses on the way down.
3/4
Last week when regulators were determined to arrest the stock market collapse, encouraging share buybacks probably seemed like a good idea. But for those worried more generally about excessive debt build-up, they might make things worse in the longer term.
Last week when regulators were determined to arrest the stock market collapse, encouraging share buybacks probably seemed like a good idea. But for those worried more generally about excessive debt build-up, they might make things worse in the longer term.
4/4
In my 2001 book I discussed how, in rapidly-growing developing economies, when the economy starts to slow policymakers often turn to measures that are implicitly pro-cyclical to support growth. Beijing should be very aware of this risk.
In my 2001 book I discussed how, in rapidly-growing developing economies, when the economy starts to slow policymakers often turn to measures that are implicitly pro-cyclical to support growth. Beijing should be very aware of this risk.
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