Behinds Quote by Michael Hudson
“The other dynamic keeping the stock market up - both for technology stocks and others - is that companies are using a lot of their income for stock buybacks and to pay out higher dividends, not make new investment,. So to the extent that companies use financial engineering rather than industrial engineering to increase the price of their stock you're going to have a bubble. But it's not considered a bubble, because the government is behind it, and it hasn't burst yet.”
About This Quote
Source Speech: Economic commentary, 2020
Companies boost stock prices via financial tricks like buybacks and dividends, creating a bubble that’s ignored because of government support.
In simple terms: Financial engineering inflates stock values, risking a hidden bubble.
Key Takeaway
Watch for unsustainable financial practices.
Themes
finance
stock market
government policy
economic bubbles
Mood
cautious
critical
Type
analytical
explanatory
When to use this quote
- investment decisions
- corporate finance
- regulatory oversight
Key Concepts
financial engineering
macro economics
policy analysis
Questions to Reflect On
- What are the long‑term effects of buybacks?
- How can policy prevent bubbles?
A Different Perspective
The analysis may oversimplify complex market dynamics.
