Results 1 to 7 of 7

Thread: The Bailout Monies

  1. #1
    Custom Title Joesitz's Avatar
    Join Date
    Jul 2003
    Location
    New York City
    Posts
    20,185

    The Bailout Monies

    Had a sunday brunch with my Finance expert at Price Waterhouse, I asked him how does the bailout money get distributed?. The monies will go to the established blue chip companies (think GM) and top financial institutions (think AIG) first. What will happen to the bonusus?. They will be permitted to take the bonuses out of the bailout money. And then what? Hopefully the managers will be able to put the company back in business. Who will manage the companies once they receive the gift of the taxpayer/ The companies will continue to be managed by the same CEOs who brought the company down. What? Who? Apparently there are no others capable of such expertise.

    and this is not a depresession? I'm depressed.

  2. #2
    Custom Title antmanb's Avatar
    Join Date
    Feb 2004
    Location
    UK - Manchester
    Posts
    4,913
    Quote Originally Posted by Joesitz View Post
    Had a sunday brunch with my Finance expert at Price Waterhouse, I asked him how does the bailout money get distributed?. The monies will go to the established blue chip companies (think GM) and top financial institutions (think AIG) first. What will happen to the bonusus?. They will be permitted to take the bonuses out of the bailout money. And then what? Hopefully the managers will be able to put the company back in business. Who will manage the companies once they receive the gift of the taxpayer/ The companies will continue to be managed by the same CEOs who brought the company down. What? Who? Apparently there are no others capable of such expertise.

    and this is not a depresession? I'm depressed.
    Is the government not taking preference shares in the companies that it bails out though?

    That would seem wholly wrong to simply hand over a wad of cash and get nothing but empty promises back.

    Ant

  3. #3
    Custom Title Joesitz's Avatar
    Join Date
    Jul 2003
    Location
    New York City
    Posts
    20,185
    Ant. I think it's all done in the back room away from the press. I don't think there is any real care of bringing the economy up from the depths. Why should there be?

  4. #4
    Custom Title antmanb's Avatar
    Join Date
    Feb 2004
    Location
    UK - Manchester
    Posts
    4,913
    Quote Originally Posted by Joesitz View Post
    Ant. I think it's all done in the back room away from the press. I don't think there is any real care of bringing the economy up from the depths. Why should there be?
    That's extremely scary, and really pointless pouring of money down the drain. While we've had similar problems with bailout monies being spent on fat cat bonuses, at the least the banks that have been saved have been partially nationalised and the government own the controlling shares, and has preference rights in terms of repayment. Of course if there is no money to repay then arguably what's the point.

    Scary times.

    Ant

  5. #5
    Custom Title
    Join Date
    Oct 2006
    Posts
    1,560
    What can government do? To take over? The government doesn't have the abilities to take over even if they want to. They have to give the CEOs the insentives and let them manage. After all they are worms but they are still the experts. The situation does worrysome. Will stimulus plan work? No one knows. We'll see.

    Personally, I think no one could do better job than Obama now. He is really trying to make things work.

  6. #6
    Custom Title Joesitz's Avatar
    Join Date
    Jul 2003
    Location
    New York City
    Posts
    20,185
    It's obvious to me that the "WatchDogs" (Bush appointees) were incompetent and laxed in taking any measures to prevent crisis.

    Hopefully Barack has a more effective team. Good news yesterday with the stimulus showing some promise. Citi looks good.

  7. #7
    Minusaramadad from Arctaroon John King's Avatar
    Join Date
    Jul 2003
    Location
    Cowtown
    Posts
    516
    There are only three options for the government to take; 1: To bailout all companies facing bankruptcy; 2: To bailout some companies or 3: To bailout none of them.

    Now, if the government were to take option 1, the bill for that would bankrupt the nation. And would turn the work ethic upside down. Think about it. If a company is successful, it would be penalised by having to pay huge taxes. But if it fails, it would be rewarded with the bailout. Success would be punished and failure would be rewarded. Doesn't that spell a recipe for running the economy into the ground?

    What if the government were to take option 2? Bailout some companies, but not others. In other words, the government would determine which companies are to survive, and which ones are to fail. Does anyone need a more sure-fire road to corruption?

    No, the only sensible route is for the government to not bailout any company. The only 'help' the government should offer is to avoid enacting lunatic regulations that destroy even more jobs (like hiking the minimum wage again).

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •