When I saw the S&P downgrade of ExxonMobil today, my first reaction was similar to Chris Anderson’s — it’s more proof that Big Fossil Fuel is on the decline. But then I recalled the lessons I learned from reading early galleys of Rana Foroohar’s timely and lucidly reported book, Makers & Takers, out next month.
Foroohar explains the destruction wrought by the financialization of our global economy. She pays particular attention to how the world’s largest and wealthiest companies are incented by Wall Street to raise cheap and risky debt to buy back their own shares and issue dividends to shareholders, even as they sit on massive, tax-sheltered hoards of cash. Exxon is not alone in this practice, in fact, one of the worst offenders is Apple — which Foroohar notes regularly borrows at low interest rates so as to buy back shares, pay dividends, and drive its share price up.
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