With Demand Declining, Companies Turn to Buy Own Stock

Rash to Some, Stock Buybacks Are on the Rise – NYTimes.com.

Please, look at the interactive chart in the NYT article.

This happens just as the U.S. Senate Super-committee calls it a day, throwing any deficit reduction into auto-mode (clause embedded in debt-expansion agreement of the summer)

I wrote about this issue of stock buybacks  a few days ago. But it is symptomatic enough to warrant a second posting.

American companies are going back to the artificial padding of their balance sheets by buying their own stock. More and more companies are doing it in greater volumes of shares and the levels for 2011  have matched those of 2006, just prior to the financial crisis.

Notice in the interactive chart that there was a dip in the practice during the period of the stimulus, around 2009, when demand picked up fueled by federal dollars. But the trend is there since 2004, 2005, slowly climbing  and it is on the rise again.

It is my belief that this phenomenon is inversely proportional to demand, and particularly internal demand since the stimulus of 2009-10 did not have any considerable effect on exports. The money was spent at home.

And this, in my opinion, reinforces the my argument that to have growth we must re-invigorate the American middle and working classes.

Since we have to start somewhere, why not New Jersey?