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The risks are entirely private. Shareholders and lender capital is at risk, not the general public.

• lovich 8y ago
  The general public includes these employees who are not getting their bonuses/severance that was promised because executives need to be paid out first. Then we have people who need unemployment to cover their lives that would have been covered by said payments. It's the same issue with Walmart and McDonald's paying too little to live on and teaching their employees how to sign up for benefits
• eigenvector 8y ago
  When a big company goes bust and lays off thousands of workers or even defaults on pension obligations (I know Sears did in Canada I don't know if they did in the US), it's the public who pick up the costs through unemployment benefits and welfare payments.
  • rlucas 8y ago
    Your point is well taken when extremes occur (public purse ultimately probably backstops both unemployment and pensions via PBGC) but it’s important for readers to know that’s not the normal case even in a bankruptcy. Unemployment is structured as an insurance program, not a dole, and in theory an employer has paid in over the years enough to actuarially pay for it. Same thing with pensions. The system does have some “normal accident” anti-fragility type stuff built in. But yes, 1. in a catastrophic outcome the public purse will get hit for hard costs and 2. even the “insured” benefits mask lots of externalities that the corporation doesn’t bear but employees and municipalities etc do.