Then there is the practical reality that the government simply doesn’t
have the capacity to review the financial situation of millions of
businesses and quickly determine which ones genuinely need capital and
will be viable enough to pay it back. In addition, the potential for
fraud and political favoritism is significant...
Behind the scenes, airlines, cruise lines, hotel companies and theme
parks are already making the case that the government should simply hand
over an initial tranche of cash to compensate them for the lost revenue
they suffered as a result of government restrictions on travel or large
gatherings. That would be a mistake...
there is precedent for such grants to the airlines in the 9/11 rescue
package, that was a time when airlines were routinely reorganizing under
the bankruptcy code. But after 20 years of unchecked consolidation, the
airlines — along with hotel operators and theme parks — have become
disciplined oligopolies characterized by high prices and profits. They
should get no better deal from the government than if they were seeking
capital from Warren Buffett and Berkshire Hathaway.
not all the government should demand. Until the government gets its
money back, the companies should be prevented from paying any executive
more than $2 million a year in salary, bonus and stock incentives, which
would be a comedown for the chief executives of nearly all of these
companies. They should also be prevented from paying shareholders any
dividends or buying back any shares of their stock. And rather than
laying off a large number of employees, they should be required whenever
possible to institute job-sharing programs so that all employees remain
on the payroll part-time until the crisis has passed. The details of
these deals should be posted on the Treasury website, along with an
audited accounting of when and how the money has been repaid.
More at the link.
: A Slate
article decries bailing out the airline industry:
It has been a little more than two years since American Airlines CEO Doug Parker told investors,
in an instant business school cautionary tale, “I don’t think we’re
ever going to lose money again.” How time flies when a viral pandemic
ravages the earth...
Fact check: true. Airlines are coming off a remarkable 10-year run. Delta’s profits for
each of the past five years, back from 2019 to 2015, were $4.8 billion,
$3.9 billion, $3.2 billion, $4.2 billion, and $4.5 billion. Mergers
have given the big four (Delta, United, American, and Southwest) about
80 percent of the U.S. market. With oil prices low and the economy
humming along, it has been a great time to run an airline.
So now that the lean times are here—admittedly, a surprising turn of
events for us all—where did all that money go? Why are
multibillion-dollar airlines held to a budgeting standard that, if it
were adopted by a typical American household, would seem totally
irresponsible? And why, if they blew through all that cash, should we
help them now?...
Nobody wants to bail out executives and shareholders who spent years
lining their pockets as hundreds of thousands of owner-operated
restaurants go out of business. But letting the planes go down would put
nearly a million people out of work and deprive the country of nearly
all its long-distance travel infrastructure.
More at the link.
The Airlines Want A $58 Billion Bailout After Spending $45 Billion On Stock Buybacks: https://jalopnik.com/the-airlines-want-a-58-billion-bailout-after-spending-1842376268ReplyDelete
I also saw this comment on Reddit:
"I just saw an article that Norway requires companies that receive bailout money can't pay dividends or bonuses until the people are paid back. No profits to execs and investors on the taxpayer's tab."
Yup. The story was carried by the BBC this afternoon -Delete
First of all, politicians and economists should worry less about "markets" and more about the people making up those markets. If you take care of people, the markets will follow. The markets have been anthropomorphized too much.ReplyDelete
Second, industry bailouts should come with severe restrictions. For instance, the travel industry should become much greener. Casinos shouldn't have gambled on being open, and should do much more to prevent addiction. Couple that with CEO maximum salaries and bans on profits, then we're going somewhere. Look at the EU (as mentioned above), some countries had quite devious conditions on their bank bailouts.
Casinos are money making machines ,and they want a bail out ,ffs .ReplyDelete
PS i went up the big tower in Las Vegas in 2012 ,how come i needed a gas mask to walk through the casino because of all the ciggarette smoke ?