Some of the biggest frauds become obvious if you look at it in a different light. I have been picking stocks for years and always assumed corporate debt was legit. It is extremely hard to buy corporate debt. There are 1000s of companies with tons of debt, yet they most likely will never ever pay a dividend. Since private equity owns the company, they have no reason to issue dividends. It is hard to believe, I figured this all out based off of gigamining on the bitcoin stock exchange and Romney holding foreign trusts. gigaming decided to issue bonds which are taxed as ordinary income instead of dividends, which are subject to 44.7% taxes. The solution is simple TAX CORPORATE DEBT INTEREST. However, it will never happen as this system is imbedded into both aisles as the revolving door. Made with dia.

Note, the $10000 bond can be imaginary, or started with $1

steeeellllllhooouuuuuuuussseeee

Can't believe you are old enough to have a firefighter nephew, assumed you were like 19 and just ignorant, not full of a lifetime of stupid.

The company issues $100 in debt, the blocker buys the debt. The $100 is not taxed is goes directly to cash. The company issues $100 in dividends. The dividend goes to the blocker.

The company issues $100 in debt, the blocker buys the debt. The $100 is not taxed is goes directly to cash. The company issues $100 in dividends. The dividend goes to the blocker.

The company issues $100 in debt, the blocker buys the debt. The $100 is not taxed is goes directly to cash. The company issues $100 in dividends. The dividend goes to the blocker.

The company issues $100 in debt, the blocker buys the debt. The $100 is not taxed is goes directly to cash. The company issues $100 in dividends. The dividend goes to the blocker.

The company issues $100 in debt, the blocker buys the debt. The $100 is not taxed is goes directly to cash. The company issues $100 in dividends. The dividend goes to the blocker.

$500 in debt from only $100 in cash. The blocker and the company are owned by the same firm. Once the company is loaded up with say $1,000,000,000 in debt, take it public. Issue a debt covenant to prevent them from issuing a dividend.

Most likely the blocker would borrow $1,000,000 as short-term and pay it back the near future from the dividend and interest payments.

Bonds and dividends are virtually identical, distributions of operating profit. Companies survive based on if they are profitable, not whether they have access to capital. TAX BOND INTEREST. It will remove most of the debt from corporations as if they get any, the shareholders will fire the CEO.

Steeeeeeeeelllllllllhouuuuuusseeeeeeeeee

The blocker buys the debt because....why? i.e. where does this capital come from?

The company repays the debt when due....how?

1) Invent imaginary bond
2) ???
3) Profit

A. To obtain the interest payments from the debt. The taxfree cash flow from operating earnings.

B. I consider capital to be a material object. But, capital is not really needed in the blocker-corporate-dividend loop. You might need a short term loan by the blocker to put the debt on the books of the company.

C. 2. Debt never needs to be re-paid, the debt can be rolled over. When it comes due, the company offers a new bond equal the the debt face value. The blocker buys that too. The debt is just a facade to funnel the debt interest to the blocker.

I just realized your contention is that PE firms are making their money through interest payments funneled through a blocker corporation.

I can't tell if you are dumb or have a legitimate mental illness.

EDIT: Please find a qualified financial advisor ASAP. You should not be managing your own money.

It is pretty much fact verified by top investors and magazines in the country. Thank you on your kind insight.

The kind part was the advice that you never, ever actively invest your own money. It's the best advice you have ever received.

Steelhouse clearly does have a mental illness. I just can't figure out where he comes up with these insane ideas though

Hopefully he will get kicked out of the convention, allowing Ron Paul to rise. Corporate debt should be taxed at 35%. Private equity would be done, and the stock market can start having real returns again.

In 2007, Domino’s Pizza paid a $13.5 dividend to investors against a per-share price for the stock of only $33. The company financed its dividend with borrowed money, and repositioned itself so that it was partially financed by both equity contributed by investors, and debt owned by bondholders and bankers.

There is even a term dividend recapitalization.

It's like steelhouse read the Finance 101 book on the DuPont formula (and maximizing ROE) and then failed to understand the full chapter.

In case anyone's interested, this (well, the formal version, not the steelhouse psychedelic version) hypothesis is studied in higher level finance courses as Modigliani and Miller Hypothesis. It's easily discredited, even on the conceptual level, by the cost of financial distress (default, bankruptcy, cash flow).

And no, private equity wouldn't be done. Private equity's greatest weapons are nimbleness and the people it employs. Tax shields are just icing.

Yes, a company that is 100% debt is worth more than a company that is 100% equity thanks to the tax shield.

Steelhouse, answer this question: Why would a company prefer to issue debt over equity and vice versa? Maybe that will help explain some things.

I went over all this with him in another thread, don't bother, he can't grasp finance 101.

He thinks equity should get preference over debt in a bankruptcy, but that lenders would still lend under these circumstances.

He also thinks Best Buy getting bought out is bad for him as a shareholder because fair value is $100 a share.

He's either mentally ill, an elaborate level, or the dumbest person on the internet. Not sure which.