Companies getting bailed out

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  • Companies getting bailed out
  • Premier Icon Pook
    Subscriber

    Ok, so the banks are getting bailed out left right and centre despite, I assume, them making fundamentally wrong business decisions; most likely giving people who can’t pay mortgages a big mortgage and then not being able to get the money back.

    The car companies are getting bailed out left right and centre despite most likely building too many cars that they then can’t sell.

    Now, i’m a director of a small company of five people, and we use about 6-7 regular freelancers. We’re doing ok (never been busier in fact), but say last year I’d decided to spend a lot of money, speculatively assuming without any guarantee that this year we’d be busy, and then say we’re not, ie: I make a fundamentally wrong business decision, what would the liklihood of my company getting bailed out be? I suspect 0% chance.

    Why? I can understand the banks being bailed to some extent as it will protect pensions etc, but as for the car companies, is bailing them out just to save jobs.

    Smaller companies, such as mine, I suspect would just be allowed to go to the wall. Wouldn’t supporting these smaller companies be worthwhile for the government/economy/country instead of just saving the big ones?

    Premier Icon piedi di formaggio
    Subscriber

    ….and I bet the very banks getting bailed out wouldn’t have hesitated tp close you down and blame you for having poor business practices!

    Glad to hear you’re doing OK

    sootyandjim
    Member

    Its purely a numbers game.

    If your company goes to the wall is there the potential for thousands of people to suddenly be reliant on the welfare state?

    I suspect not.

    Whilst its easy to see the government bailing out the banks/car companies with £XXmillion its not so easy for the layman to comprehend the alternatives.

    On top of job seekers allowance the unemployed are entitled council tax benefit, free prescriptions, free dental treatment (if you can find a dentist of course) and a host of others rebates and benefits. Also those out of work may struggle to make payments on their houses and if they are repossessed then those people then become a further burden of the state through temporary housing costs etc.

    Its easy for the likes of the Daily Wail and the chattering classes to denounce the government bail out of the banks and big industry but ultimately if they were to fail the country would be up to its ears in a hell of a lot more debt.

    No its not right that private companies should suddenly become a burden for the state but this is where we find ourselves and there is no real sensible alternative, unfortunately.

    Premier Icon Pook
    Subscriber

    but do numerous small businesses grouped together not have the same worth as one big one?

    Premier Icon chakaping
    Subscriber

    I assume it’s the headline effect.

    If your company goes bust you might get a small headline in the local paper.

    If the Vauxhall plant closed it’d get a big headline on the front page of all the papers.

    I assume the government is more worried about the knock on effect on national confidence, as well as immediate effect of a few thousand workers laid off.

    Premier Icon mikewsmith
    Subscriber

    if you keep a bank and a car company going then all the smaller companies ie all the way down to you seem some money flowing down the pipes to you.

    sootyandjim
    Member

    …but do numerous small businesses grouped together not have the same worth as one big one?…..

    No, is the simple answer.

    Whilst 1000 businesses of similar size to yours may employ 6000 people between them its still small fry compared to the like of the motor industry which has nigh on 500,000 people involved, including in the many small companies of similar size to yours which provides services/support. Plus 1000 small businesses don’t generate anywhere near the amount of tax revenue that is generated by these huge industries that pay the top level of corporation tax, the tax (VAT) that people pay on their products and the tax that people pay on top of the duty and cost of the fuel that they put into these products.

    Put it simply, the huge layers of potential taxation generated by the likes of the car industry far out weigh the potential tax revenue lost vs potential burden on the state generated by a large number of small businesses.

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