Contemplating what the effect would be if Corporate America could only use equity financing?
Instead of competing on earnings per share they would have to compete on book value per share!!!
In other words you shares are always guaranteed to be worth book value by management.
To do this they would have to guard against lawsuits! Because management would be liable for the loss and not shareholder? If shareholders were to be made liable for lawsuits then all meetings and discussions would have to be available to the public in real time!!!! And shareholders could weigh in on them. This would not be perfect. But liability for the actions of officers can not be put on shareholders unless shareholders have a direct say, immediate knowledge and immediate ability to opt out per sale of shares.
In order for this to work the intelligence level of all of the United States would need to be raised to the level of understanding business in a highly competent manner.
The benefit would be that during an economic downturn there would be less hardship and bankruptcy. Bankruptcy being defined as not being able to pay those who have loaned you money.
These are just my initial thoughts but I think it needs to be seriously considered. When you look at the President of Citigroup Jamie Diamond losing $2 billion dollars and being unaccountable for it you realize the system is wrong. That $2 billion could have made a substantial investment in renewable solar energy but he squandered it. And that is indeed Taxpayer money he squandered. Why? Money center banks are entrusted with the faith of the United States Government to make loans and that is why they are allowed to borrow at a very low rate from our Government. Not only that but the Taxpayers did indeed bail these stooges out when they went bankrupt.
The argument in business school was that debt financing was cheaper than equity. But during an economic downturn as demand for products of all business's fades it is debt financing that leads to bankruptcy and loss of jobs and not equity.
United States Banks were not formed for the wheeling and dealing scalping types like Jamie Diamond to run. They were created to help the country move forward in a positive direction.
And what do our miserable senators then ask Jamie Diamond? Did we create to many laws to restrict your business? It makes you want to puke doesn't it. This man just lost $2 billion and our weak kneed review panel is kissing him on the cheek and saying there, there. He loses money and the blue bloods offer him the boosom. Wake up America- these people are not us.
Thomas Paul Murphy
Copyright 2012 Thomas Paul Murphy
Originally published on 06 14 2012 at: www.themilwaukeeandwisconsinnews.blogspot.com
Instead of competing on earnings per share they would have to compete on book value per share!!!
In other words you shares are always guaranteed to be worth book value by management.
To do this they would have to guard against lawsuits! Because management would be liable for the loss and not shareholder? If shareholders were to be made liable for lawsuits then all meetings and discussions would have to be available to the public in real time!!!! And shareholders could weigh in on them. This would not be perfect. But liability for the actions of officers can not be put on shareholders unless shareholders have a direct say, immediate knowledge and immediate ability to opt out per sale of shares.
In order for this to work the intelligence level of all of the United States would need to be raised to the level of understanding business in a highly competent manner.
The benefit would be that during an economic downturn there would be less hardship and bankruptcy. Bankruptcy being defined as not being able to pay those who have loaned you money.
These are just my initial thoughts but I think it needs to be seriously considered. When you look at the President of Citigroup Jamie Diamond losing $2 billion dollars and being unaccountable for it you realize the system is wrong. That $2 billion could have made a substantial investment in renewable solar energy but he squandered it. And that is indeed Taxpayer money he squandered. Why? Money center banks are entrusted with the faith of the United States Government to make loans and that is why they are allowed to borrow at a very low rate from our Government. Not only that but the Taxpayers did indeed bail these stooges out when they went bankrupt.
The argument in business school was that debt financing was cheaper than equity. But during an economic downturn as demand for products of all business's fades it is debt financing that leads to bankruptcy and loss of jobs and not equity.
United States Banks were not formed for the wheeling and dealing scalping types like Jamie Diamond to run. They were created to help the country move forward in a positive direction.
And what do our miserable senators then ask Jamie Diamond? Did we create to many laws to restrict your business? It makes you want to puke doesn't it. This man just lost $2 billion and our weak kneed review panel is kissing him on the cheek and saying there, there. He loses money and the blue bloods offer him the boosom. Wake up America- these people are not us.
Thomas Paul Murphy
Copyright 2012 Thomas Paul Murphy
Originally published on 06 14 2012 at: www.themilwaukeeandwisconsinnews.blogspot.com
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