Janet Yellen and her Fed cronies have been touting the salubrious effect of QE and zero interest rates.
In the "Dark Side of Artificially Low Interest Rates" we noted Fed Chair Ms. Yellen's defense of QE “You know, a lot of people say, this is just helping rich people. But it’s not true. Our policy is aimed at holding down long-term interest rates, which supports the recovery by encouraging spending. And part of it comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up throughout the economy.”
WRONG!
Ms. Yellen, it doesn't work that way. The proof is in the current economic data that shows while home and stock prices are rising, there is no corresponding increase in jobs created or homes sold. The labor participation and home ownership rates have dropped during the five long years of QE. Existing home sales are down year over year and if you are tempted to blame "lack of housing inventory" for the decrease in sales, consider new home sales, that would make up the supposed deficit in housing inventory, are at historic 30-40 year lows.
HP Announces Earnings, Extent of Job Cuts and its Share Buyback Program
As part of their disappointing earnings announcement this week, Hewlett Packard (HP) also announced that it had cut 44,000 jobs since 2012 and that number would increase to 55,000 by the end of this fiscal year.
HP will take a $1.3 billion separation charge in connection with the fired employees.
HP spent $1.6 billion in the first quarter buying back its own shares which was 66% more than they spent on capital expenditures.
Low Interest Rates Encourage Firings
While we were correct in our observation from last year that low interest rates encourage stock buybacks and discourage hiring and capital investment, it now seems that low interest rates actually encourage firings to fund stock buy backs.
More...
https://smaulgld.com/hp-fires-employees-buys-back-shares/
