Dividend and Debt

One must start with a bias, and then you have to find some proof. Here is an article which agrees with my bias, but does not present exactly the proof which I would require to provide a researched argument. I should first express my bias, which is the Statement that companies are in violation of the personal propriety rights of Stockholders, when they refuse to advance Dividends on their Stock. Dividends not only provide a Return, but also present a health measure on the Stock which Investors can utilize to make decisions on Investment. The lack of Dividends continues as excuse to expand the issuance of Stock, diluting the value of previously held Stock; allowing for a undeserved expansion of Stock Option and Stock Grants to Management, who pay themselves even when there has been failure of efficient performance. Stockholders lose Investment information, loss of the value of their investment, and separation from any Profit coming from successful conduct of the enterprise. Any reliable economist or accountant should estimate the negative Profit (Cost) generated by refusal of Dividend dispersal, but no one does. All we get are informative articles like this one discussed, without any sensible review of the potential evaluation of the Cost to Stockholders.

I found this Post which presents a delightful grasp of some of the horror in store, as the storyline unfolds. It brings forward a contention which I have been considering for some time. The basic thesis states that there is a cyclical point where Stimulus Spending is actually regressive. There comes a point where Stimulus propels such a corruption of Pricing that Stimulus actually defeats productive activity. I could come up with many reasons for this, probably the greatest being that deficit investment opportunity achieves a greater security and higher Return to Investment, than does actual Production. Additional elements are higher resource prices which are abnormal, supported markets which are not representative of Supply quantities, and an over-dispersal of liquidity to inefficient operations. We find Ourselves dealing with an artificiality of Market conditions, all of which stress Growth factors in a period which will not be corrected without a Contraction of production functions.

I will finish today’s Post with this article, which gives some vital information on the Credit Card industry, and Consumers’ response to it. The greatest element to be drawn from the information consists of a real lack of protection from the very practices which are the most profitable to the Card companies. They can still set their own Interest rates, increase service fees at will, and hide relevant information from Cardholders. They can still entice Consumer debt with cheap initial rates, and increase those rates without proper notification to the Consumer. The only real gain to Consumers from the legislation prohibits Card companies from charging Consumers financial charges for paying their Credit balances. The article mentions some glaring omissions, then glosses over what those omissions actually do to the poor Consumer. lgl