In fact, the only impact that free money
market funding has on corporate America is round-about and perverse.
To wit, it flushes money managers into a desperate quest for
yield and provides stock speculators with endless opportunities to load up
their trucks with zero cost carry trades, thereby driving the stock
averages to lunatic heights.
As a result of this double-whammy, the
C-suites of corporate America have been turned into glorified
gambling parlors. The stock option obsessed executives domiciled there are
endlessly and overpoweringly presented with the opportunity to sell cheap
corporate credit to yield-hungry fund managers and use the proceeds to
buyback their own over-priced stock or to acquire at a hefty premium the
equally over-priced stock of their competitors, suppliers and customers, or any
other company that Wall Street bankers happen to be peddling.
Again,
as I demonstrated last week, after 80-months of the absurd proposition that
money has no natural and inherent economic cost the pettifoggers who held
forth at Jackson Hole betrayed no clue whatsoever that they are aware of the
obvious:
On the margin, all of the gains
in business debt since 2008 has been flushed right back into Wall Street in the
form of stock buybacks and debt-financed takeovers.
