4 ms·

> So airlines profited around $28 billion in 2019 [1], but none of them thought to sock away money or do anything remotely forward looking or responsible in cas

> So airlines profited around $28 billion in 2019 [1], but none of them thought to sock away money or do anything remotely forward looking or responsible in case of a downturn. Companies typically do not keep a ton of money around because they're supposed to be distributing profits to the public (i.e., shareholders). Companies that do keep money around, like Apple, are correctly criticized for not re-investing the money into the economy (thus creating jobs and growth) and not returning it to investors (who would, with the dividend, presumably invest the money in another company that had a growth opportunity). Like it or not, re-using profits is how we have achieved the modern way of life. Keeping money lying around does not spur the economy, which means fewer jobs, fewer products, and a stagnating economy.

anyfoo 7y ago
So, would you still say that those businesses that took cash to the side for eventualities are “correctly criticized” now?
vkou 7y ago
I'm fine with this, as long as bailouts for companies that redistribute money to shareholders come with haircuts for the shareholders. If my tax money is being used to rescue a business, I want to either own a part of that business, or receive market-rate interest payments on it.
- petschge 7y ago
  How about instead of simply getting bailed out they have to create additional shares that they sell to the government at the current price set by the open market. The government is then free to sell the shares after some time or to actually exercise the voting right that come with the shares if they decide to hold onto the shares.
  - tathougies 7y ago
    Well when it comes to potential help from the federal government, I have no idea what form that will take. Most likely it'll be in loans. However, given what the federal reserve did recently, they did actually just give loans out and are expecting a repayment or they purchased income producing assets from large businesses. They did not simply give money away, and are expecting it back. If the federal government follows suit, they stand to make a lot of money from this, as they did during the last recession. The United States government has a rather good history of profiting from bailouts.
- aeternum 7y ago
  >If my tax money is being used to rescue a business, I want to either own a part of that business, or receive market-rate interest payments on it. Contrary to popular belief, this did generally happen with the bank bailout: But, the fact remains, due to interest, dividends and other revenue streams, the government has received more money back ($266.7 billion, according to the Treasury) than it handed out to banks under the bailout law ($245.2 billion). We rate this claim Mostly True. https://www.politifact.com/factchecks/2012/oct/25/barack-obama/barack-obama-says-banks-paid-back-all-federal-bail/ https://www.politifact.com/factchecks/2012/oct/25/barack-oba...
  - vkou 7y ago
    The bank bailout lent money out at sweetheart, below-market rates. So, no, I was not happy with it. The government should have only stepped in to deal with a lack of liquidity, by providing appropriately priced loans - not to give out discounts.
magduf 7y ago
>Keeping money lying around does not spur the economy, which means fewer jobs, fewer products, and a stagnating economy. This isn't true. If you personally "keep money lying around", that usually means putting it the bank, in a savings account, or maybe a CD. That money isn't doing nothing: it's being reinvested by the bank, earning them a return on their investment, and they're giving a little back to you in the form of interest. (Hopefully you're smart enough to put your main savings in a bank that actually gives you interest...) It would be the same with any company. Saving money in low-risk investments would be the equivalent. That money is still being invested somewhere in the economy, just not in more volatile places.

anyfoo 7y ago

So, would you still say that those businesses that took cash to the side for eventualities are “correctly criticized” now?

vkou 7y ago

I'm fine with this, as long as bailouts for companies that redistribute money to shareholders come with haircuts for the shareholders. If my tax money is being used to rescue a business, I want to either own a part of that business, or receive market-rate interest payments on it.

petschge 7y ago
How about instead of simply getting bailed out they have to create additional shares that they sell to the government at the current price set by the open market. The government is then free to sell the shares after some time or to actually exercise the voting right that come with the shares if they decide to hold onto the shares.
- tathougies 7y ago
  Well when it comes to potential help from the federal government, I have no idea what form that will take. Most likely it'll be in loans. However, given what the federal reserve did recently, they did actually just give loans out and are expecting a repayment or they purchased income producing assets from large businesses. They did not simply give money away, and are expecting it back. If the federal government follows suit, they stand to make a lot of money from this, as they did during the last recession. The United States government has a rather good history of profiting from bailouts.
aeternum 7y ago
>If my tax money is being used to rescue a business, I want to either own a part of that business, or receive market-rate interest payments on it. Contrary to popular belief, this did generally happen with the bank bailout: But, the fact remains, due to interest, dividends and other revenue streams, the government has received more money back ($266.7 billion, according to the Treasury) than it handed out to banks under the bailout law ($245.2 billion). We rate this claim Mostly True. https://www.politifact.com/factchecks/2012/oct/25/barack-obama/barack-obama-says-banks-paid-back-all-federal-bail/ https://www.politifact.com/factchecks/2012/oct/25/barack-oba...
- vkou 7y ago
  The bank bailout lent money out at sweetheart, below-market rates. So, no, I was not happy with it. The government should have only stepped in to deal with a lack of liquidity, by providing appropriately priced loans - not to give out discounts.

magduf 7y ago

>Keeping money lying around does not spur the economy, which means fewer jobs, fewer products, and a stagnating economy. This isn't true. If you personally "keep money lying around", that usually means putting it the bank, in a savings account, or maybe a CD. That money isn't doing nothing: it's being reinvested by the bank, earning them a return on their investment, and they're giving a little back to you in the form of interest. (Hopefully you're smart enough to put your main savings in a bank that actually gives you interest...) It would be the same with any company. Saving money in low-risk investments would be the equivalent. That money is still being invested somewhere in the economy, just not in more volatile places.