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This sounds a bit similar to - and just as ludicrous as - American taxpayers financially assisting or “bailing out” massive companies which were/are so bad at c

This sounds a bit similar to - and just as ludicrous as - American taxpayers financially assisting or “bailing out” massive companies which were/are so bad at cash flow management that their runway was/is only 1-3 months, despite hundreds of millions - if not billions - in annual revenue and a varying chunk of that being profit.

golergka 6y ago
American taxpayers invest their 401k money into american stock market, and they vote with their money for such companies. I'm against bailouts on libertarian principles, but if you're going to do bailouts at all, I don't see any reason why you wouldn't bailout these companies. (And, every time bailouts are mentioned, I have to notice that it's not free money, it's loans, with interests, and 2008 bailout have actually made money for american taxpayers in the end. May be not as much money as other investments would, but it also had a nice side effect of saving american (and probably world) economy from even worse disaster). Edit: OK, I was wroung about free money, by bad. But when the 2008 bailour is mentioned, I feel that most people discussing it still think of it as some sort of handout.
- jlmorton 6y ago
  That's not exactly true this time. The airlines, for instance, are getting about $35 billion in outright grants, and $15 billion in loans and warrants equal to 10% of the total. The large part of it is free money, and many major US airlines have been the worst offenders at financial engineering, spending the large part of their free cash flow on stock buybacks, and running the business on razor margins.
- onlyrealcuzzo 6y ago
  The loans are forgiveable if used for salaries and rent and interest on existing debt, as long as you hire back or keep 90% of your staff at 90% of wages. So any company can say that they used 100% of the money to pay for the approved things for 8 weeks, and that amount of money is forgiven. Most of the loan is like free money to most companies.
- dv_dt 6y ago
  No, the 2008 recession saw Fed Quantitiative easing put in $4.6T in money that was never paid back to outright buy assets off of banks at full value. People only get told about TARP which was a temporary loan, but the vast magnitude of bailout was around the QE buyouts.
- cbHXBY1D 6y ago
  Almost half of Americans don't have any retirement savings at all, not to mention 401ks.
gruez 6y ago
>massive companies which were/are so bad at cash flow management that their runway was/is only 1-3 months Is this considered odd? These are established companies, not startups. They don't need months or years of runway. >despite hundreds of millions - if not billions - in annual revenue and a varying chunk of that being profit I'm not sure why millions/billions in revenue is a relevant metric here. If they operate on razor thin margins, they're going down either way.
- mbrameld 6y ago
  > They don't need months or years of runway. Isn't that only because bailouts are available for unforseen hardships that would otherwise require a runway?
  - kevin_thibedeau 6y ago
    MBAs strategically weaken businesses with debt instruments so they aren't "leaving money on the table". We shouldn't be excusing this sort of behavior. Businesses schools need to start teaching their acolytes about planning for a future more than three months away. Everyone wants to look like Apple with a juiced vanity stock price but they won't squirrel away the cash needed to survive a rainy day.
    - gaukes 6y ago
      Business schools teach what will be relevant on the job. If large corporate bankruptcies were an issue, MBA programs would teach it.
      - anotheracct_ 6y ago
        Funny how you can also use that exact sentence to say business schools are bad at teaching.
      - SilasX 6y ago
        So ... the business equivalent of "Generals are always fighting the last war"?

golergka 6y ago

American taxpayers invest their 401k money into american stock market, and they vote with their money for such companies. I'm against bailouts on libertarian principles, but if you're going to do bailouts at all, I don't see any reason why you wouldn't bailout these companies. (And, every time bailouts are mentioned, I have to notice that it's not free money, it's loans, with interests, and 2008 bailout have actually made money for american taxpayers in the end. May be not as much money as other investments would, but it also had a nice side effect of saving american (and probably world) economy from even worse disaster). Edit: OK, I was wroung about free money, by bad. But when the 2008 bailour is mentioned, I feel that most people discussing it still think of it as some sort of handout.

jlmorton 6y ago
That's not exactly true this time. The airlines, for instance, are getting about $35 billion in outright grants, and $15 billion in loans and warrants equal to 10% of the total. The large part of it is free money, and many major US airlines have been the worst offenders at financial engineering, spending the large part of their free cash flow on stock buybacks, and running the business on razor margins.
onlyrealcuzzo 6y ago
The loans are forgiveable if used for salaries and rent and interest on existing debt, as long as you hire back or keep 90% of your staff at 90% of wages. So any company can say that they used 100% of the money to pay for the approved things for 8 weeks, and that amount of money is forgiven. Most of the loan is like free money to most companies.
dv_dt 6y ago
No, the 2008 recession saw Fed Quantitiative easing put in $4.6T in money that was never paid back to outright buy assets off of banks at full value. People only get told about TARP which was a temporary loan, but the vast magnitude of bailout was around the QE buyouts.
cbHXBY1D 6y ago
Almost half of Americans don't have any retirement savings at all, not to mention 401ks.

gruez 6y ago

>massive companies which were/are so bad at cash flow management that their runway was/is only 1-3 months Is this considered odd? These are established companies, not startups. They don't need months or years of runway. >despite hundreds of millions - if not billions - in annual revenue and a varying chunk of that being profit I'm not sure why millions/billions in revenue is a relevant metric here. If they operate on razor thin margins, they're going down either way.

mbrameld 6y ago
> They don't need months or years of runway. Isn't that only because bailouts are available for unforseen hardships that would otherwise require a runway?
- kevin_thibedeau 6y ago
  MBAs strategically weaken businesses with debt instruments so they aren't "leaving money on the table". We shouldn't be excusing this sort of behavior. Businesses schools need to start teaching their acolytes about planning for a future more than three months away. Everyone wants to look like Apple with a juiced vanity stock price but they won't squirrel away the cash needed to survive a rainy day.
  - gaukes 6y ago
    Business schools teach what will be relevant on the job. If large corporate bankruptcies were an issue, MBA programs would teach it.
    - anotheracct_ 6y ago
      Funny how you can also use that exact sentence to say business schools are bad at teaching.
    - SilasX 6y ago
      So ... the business equivalent of "Generals are always fighting the last war"?