Wouldn’t it make more sense to give the bailout money to successful companies?
- Filed under: Make Money More
- Date: Nov 15,2009
After all, the companies we are currently bailing out are going bankrupt because they are either poorly run, outdated, or inefficient. Successful companies are more likely to stay in business and keep people employed. Why don’t we give them money to expand rather than take it away from them in the form of taxes to give to broken companies? It doesn’t make sense to me to hamper to growth of healthy companies to prop up sick ones.
Yes. Bailing out solvent companies and banks is the answer, but I really don’t like any bailouts.
"accommodating sound but temporarily illiquid institutions only"
"Lender Of Last Resort":
"classical theory of the lender of last resort, those rule stressed (1) protecting the aggregate money stock, not individual institutions, (2)letting insolvent institutions fail, (3) accommodating sound but temporarily illiquid institutions only, (4) charging penalty rates, (5) requiring good collateral, and (6) preannouncing these conditions in advance of crises so as to remove uncertainty. These precepts continue to inform central bank policy today. "…"to let insolvent institutions fail, to lend to creditworthy institutions only, to charge penalty rates, and to require good collateral. Such rules they thought would minimize problems of moral hazard and remove bankers’ incentives to take undue risks.These precepts, though honored in the breach as wellas in the observance, continue to serve as a benchmarkand model for central bank policy today."
http://www.richmondfed.org/publications/research/economic_review/1989/er750202.cfm
http://www.richmondfed.org/publications/research/economic_review/1989/pdf/er750202.pdf
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5 Responses for "Wouldn’t it make more sense to give the bailout money to successful companies?"
Yes. Bailing out solvent companies and banks is the answer, but I really don’t like any bailouts.
"accommodating sound but temporarily illiquid institutions only"
"Lender Of Last Resort":
"classical theory of the lender of last resort, those rule stressed (1) protecting the aggregate money stock, not individual institutions, (2)letting insolvent institutions fail, (3) accommodating sound but temporarily illiquid institutions only, (4) charging penalty rates, (5) requiring good collateral, and (6) preannouncing these conditions in advance of crises so as to remove uncertainty. These precepts continue to inform central bank policy today. "…"to let insolvent institutions fail, to lend to creditworthy institutions only, to charge penalty rates, and to require good collateral. Such rules they thought would minimize problems of moral hazard and remove bankers’ incentives to take undue risks.These precepts, though honored in the breach as wellas in the observance, continue to serve as a benchmarkand model for central bank policy today."
http://www.richmondfed.org/publications/research/economic_review/1989/er750202.cfm
http://www.richmondfed.org/publications/research/economic_review/1989/pdf/er750202.pdf
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They don’t need it ! It makes more sense to just stop screwing middle class Americans with all these handouts !
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Then It wouldnt be "bailout" money. They dont need money if their successful. I dont think we should bail out any company, thats their problem if they didnt follow the guidelines or were poorly run. Why waste more tax money?
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Successful companies don’t need a bailout. And I agree with the ones that he is trying to help don’t deserve it. If a family files for bankruptcy, will the government intervene and bail them out? No. So why companies. I say let them close and help others thrive and get the businesses that we have overseas come home and give jobs to Amercians. I’m f*%@ing sick of seeing "Made in China" on every product I buy. I would like to call a toll-free number and get a real people that speaks American.
Obama says he will improve employment ratings. How? What jobs? New jobs are needed, so let those companies go bankrupt and let others buy them out. And get the overseas businesses back here. I live in Oshkosh and our Oshkosh B’Gosh was sent to Mexico 2-3 yrs ago. Doesn’t make sense to me.
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You are correct in thinking that it is a waste of money. They should not be spending any money at all. Those companies who are weak should go out of business and the companies that are still strong don’t need a bailout. Also, with the weaker companies out of the way it will leave an increased amount of demand in the market which will be picked up, hence, increasing profits to the stronger companies and giving them the monetary assets to expand. But, in reality those weak companies are going to be right back in this position in a few years even with the bailout. Those how know how to read the market and make the right choices will ALWAYS come out ahead. If there was a complete distribution of wealth equally among every citizen in the U.S. I am willing to bet that it would end up in the same place it is today. Those who make poor financial decision will always do so. It is never fair to have those who work hard and make sarcifices punished because those around them chose to screw up. It is the same way in dealing with our population. The rich (and most aren’t born into it) who studied hard for many years and not to mention took ALL the risk are always paying for those who chose to ruin their credit, party too much, not make investments in education, etc.!
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