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The government goal isn’t to pursue good investments at a market rate. They are trying to prop up companies that investors don’t want to touch because of their
by gen3 6y ago
The government goal isn’t to pursue good investments at a market rate. They are trying to prop up companies that investors don’t want to touch because of their current risk of failure. Spending some money now to keep a company in business can pay off in the long run, for example saving money on unemployment.
- cool_dude85 6y agoI absolutely agree, the government can certainly have other goals other than making good investments. But don't muddy the waters by saying that they are making money on the program if they're giving below market loans. They might have good reasons to do it, but they're not making money on the deal.
- Mirioron 6y agoThey are making money though. The government doesn't make money for the government. It's not like a corporation. The government makes money for the country. Saving existing institutions from collapse during a disaster tends to be a very good investment for that.
- drtillberg 6y agoWhen the Fed creates $xxx billion it "makes" money. The real question is whether the Fed bought something worthwhile. The fact that a market coalesced around the asset isn't that significant because the Fed can't withdraw from the market now without watching prices for the asset collapse.
- gen3 6y agoThe point of my argument is that the government can save money by keeping a company from folding. Having a bad return of a couple hundred million is better than a loss to society of larger proportions. My point is to avoid the whole, a penny wise and a pound foolish, thing.
- andreilys 6y agoThese companies have no penalty for firing people after receiving bailout money.
- gen3 6y agoWell, pretty much all the bailout money requires that the business not fire anyone (or re-higher anyone that they did fire). For example, thats how the small business portion of the CARES Act worked. The recent airline loans/bailouts require maintaining the same staff until September 30th.[1] I would imagine that there will be layoffs once that requirement expires. [1] https://www.businessinsider.com/airlines-coronavirus-bailout-senate-stock-buybacks-2020-3?op=1 https://www.businessinsider.com/airlines-coronavirus-bailout...
- Red_Leaves_Flyy 6y agoSo the government is just punting on problems, again? Serious question. I fail to see how bailing out mismanaged companies is worth more than an equivalent sum straight to people. Companies can be nationalized if they're essential. Can't raise the dead. Can't squeeze blood from a stone.
- gen3 6y agoI don’t support bailouts of mismanaged companies, and I do think that sending money directly to the people helps substantially. A company not doing well during COVID-19 isn’t necessarily because they were poorly managed. Giving people money, and also keeping companies afloat helps on two fronts. People can survive now, and people still have a job to walk back to once this is all over.
- fragmede 6y agoWhether you read the statement as malice cloaked in corporate doublespeak, or simply following the rules that were laid out, there's no need to imagine. United, at least, has already warned that layoffs will happen October 1st. """But the challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as October 1.""" -Oscar Munoz, Chief Executive Officer, and J. Scott Kirby, President, https://hub.united.com/united-message-munoz-kirby-2645729257.html https://hub.united.com/united-message-munoz-kirby-2645729257...