OUR UNEQUAL SOCIETY - It Happened at warp speed, How?

http://www.alternet.org/economy/driving-force-behind-americas-warp-speed-decline-unequal-society?akid=12496.294211.I1eYrU&rd=1&src=newsletter1027476&t=11

Then came financial deregulation, and Wall Street escaped its New Deal shackles. Almost immediately a new crop of financiers emerged who raised large sums of money to buy up companies. Instead of creating new value within the corporation, the fundamental goal of these corporate raiders (now called private equity and hedge fund managers) was to extract value away from the corporation and into their pockets.

What they did was nothing short of revolutionary What they did also should have been outlawed. They transformed the corporate ethos of "retain and reinvest" into "downsize and distribute." Here's how it works.
First they buy up firms using borrowed money and make the acquired corporation pay back the loans. For pulling off the deal, they use some of that borrowed money to pay themselves enormous fees, right off the top. They also provide fat bonuses for the CEOs who are to run the acquired corporation. Most importantly, they change the way top officers are rewarded. From this point on, most of their incomes would derive from stock options. The more the stock price rose, the more the CEOs would pocket.
As a result, the new incentive would be focused solely on making the firm's stock price climb. Nothing else mattered. How do you do that? You use as much of the profits as possible to buy up your own stocks! And when profits are slim, you borrow more money to buy even more of your own stock. The more you buy, the fewer shares are in circulation, and therefore each share is worth more. The stock price climbs.

By 2008-'09 corporate America was, in effect, using 75% of its profits to buy back its own stock. At the same time, loan and after loan was piled onto the corporate books to buy up even more stock. So that after buying the stock and paying off the loans, there was very little profit remaining to reinvest in the company. (The loan payments and fees, of course, went to Wall Street firms.) This is how "retain and invest" devolved into "downsize and distribute."