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I’m fine with bailing out companies as long as the owners and managers forfeit all their equity.

• munk-a 6y ago
  It's not an easy thing to find out who did what - trying to figure out which managers and owners were purposefully over-inflating equity to secure larger loans (or whatever) from those who were duped by the other managers and were just trying to keep the ship afloat is a really hard problem. And, in this fun world, you might find a terribly over-leveraged business where no one ever tried to act fraudulently but some vulture capitalist consultant helped "ensure access to liquid assets" and is now in Kiribati watching the world burn.
  • true_religion 6y ago
    That’s why the above poster suggests all owners forfeit equity. The company survives but it is nationalized, at least temporarily. In practice, I think we will see companies being sold off the friends of the sitting president, and powerful senators. Today, at least they must at least pretend to be equal in their bailouts, which gives non affiliated companies a chance to receive money.
    • simonh 6y ago
      Yes I think that's reasonable. From an economic perspective what matters is the employment, goods and services the enterprise generates. Good management should be rewarded with equity and profits, bad management or poorly exercised ownership loses out. Nobody is owed a profit, but if they get the job right they are entitled to it.
  • valuearb 6y ago
    If you are the owner or manager, it’s your job to ensure your business is appropriately funded. It doesn’t matters if you commit fraud, you also get to lose your equity for incompetence.