Should the government bail out failing companies?

Question

http://news.bbc.co.uk/1/hi/business/7504122.stm

If a company is going to fail due to bad investments it makes, should the government stop it going bust?

Answer 1

The government should not bail out failing companies due to bad investments or management. But it should, as a last resort bail out companies, like banks or mortgage lenders which  uses public money as capital for their business. Those companies that failed may cause panic to the industry and the economy. However, the bailing out process must be done with speed and tenacity,so that the bailed company can overcome their problems quickly and be able to stand on own without any further intervention either on their business or management.

Answer 2

No, it is bad/corrupt management that causes companies to fail

Answer 3

If the failing company has a chance to bring down the whole economy, then the government has a responsibility to help out - but much like the Northern Rock case in the UK, they should be looking out for savers and lenders, not the share holders who made the poor choice of investment..

Answer 4

No because if it was a good company it would not fail

Answer 5

This is an age old question. They help some but not others; one suspects it depends on how much of our politicians money has been invested.

This said, it's also certain whole areas of commercial life that the Government support; for example: When foot and mouth struck the south of England, the whole area was shut down, all businesses suffered from tourism to building! When compensation was handed out........It was ONLY the Farmers that got it (even though in most cases their losses were not the worst).

So to my mind, Governments have their favourites and they will always stick by them.......the rest can go hang!

Answer 6

not really,  otherwise, joe bloggs could set up a company knowing full well that if it fails  he will be in a win-win situation

Answer 7

Generally no, unless there are thousands of jobs at stake and the company simply needs a temporary helping hand. All loans to be repaid, of course. This would be quite rare. With Banks, however, the Government and its regulators have a duty to ensure that reckless lending and the business models that give rise to it are stopped before they impose moral blackmail on the taxpayer. As Mervyn King has already said, "moral jeopardy". I am not at all convinced that the Banks have learnt their lesson, and so the Government should not bail them out, except the usual BOE normal temporary loans in the ordinary course of business.

I appreciate that this is an easy thing for me to say, I would want to emphasise "Prevention" , because if a major Bank were to go, all h**l would break out. It would not be allowed to fail even if it meant Nationalisation.

Answer 8

Depends on the company tbh, eh?