Very good explanation. I have always try to gather this thought of stock buybacks are a good thing because a lot of US companies have been doing it for years. Best example is Yahoo, before it got sold. They were losing market share and was continuously trying to boost stock price by using their flow of cash for buybacks. That made the stock look good on surface but everything was falling apart on the inside. Hackers stolen data, the off and on merger with Verizon, and CEO Mayer subpoenaed. They had known the data was stolen months before they disclosed it to the public, terrible service to have been hiding it.

I can not understand why Mayer could earn so much over the years at Yahoo when the company was still losing money and market share. It must be those cheap lending rates the fed created that allowed corporations to continuously borrow and do buybacks. I have only started investing in 2008, but have seen more stock buybacks than stock splits in my life. I personally started to question if buybacks are really a good thing and often now I look at it as a bad thing.
Investors get instant gratification for gains from buybacks, but if the company fundamentals are not sound the long term view will not be good.

Corporations are downsizing staff and putting money back into the company to make their numbers go up. But continuously doing this would only lead to catastrophic failure. Yahoo got away because they were able to sell themselves but to imagine many more doing the same. Sooner or later there won't be enough money to do mega mergers. Then will this whole scheme fall apart and the government and corporations would blame it on speculators, lol. Thanks.