It's Called Eating Your Seed Corn

Goldman Sachs has said that large corporations are burning through their money at an unsustainable rate on stock buybacks.

The Vampire Squid, calls it, "Returning cash to shareholders," but what it really is looting by senior management.

Stock buybacks drive up the price of the stock, which takes executives stock options from worthless to a multi-million dollar payout.

It's the looting, baby:

S&P 500 companies are returning cash to shareholders at an unsustainable rate, says Goldman Sachs analysts.

Goldman data show that in the 12 months ended on March 31, firms in the S&P 500 index, spent 103.8% of their free cash flow on stock buybacks and dividends, up from 101.9% in the fourth quarter of last year.

This latest spree is the first time that constituents of the index spent more cash than they earned on payouts since the period between September 2006 and March of 2008, when there was a seven-quarter stretch during which S&P 500 companies paid out more to shareholders than they earned in cash, on a trailing 12-month basis.

They are literally borrowing money to driver up their stock price without creating any actual value.

We need to understand that this is control fraud, not responsible stewardship of the enterprise.