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Bailing Out The Economy And Its Players

923 words - 4 pages

The long-standing principle of laissez-faire-literally meaning “let it make/be”- was introduced in the 17th century in France, and ever since then a new socioeconomic view was born. Laissez-faire covers a lot of aspects of government withdrawal from the economy; one in particular blows into a controversial debate all about the green bills. Government interference to “save” huge businesses from failing, while using tax money, upsets many and pleases others. Consequently, a federal decision to use federal funds to bailout major corporations on the market is a scandalous issue, as it provides possible benefits and possible fallouts.
The government would lend money to the filing company, and if the company comes outs successful from this type of investment; it may begin to prosper and even grow from its previous state. The most recent bailout occurred in 2009, infamously known as The Big 3 Auto Bailout, aiding the sinking auto companies General Motors and Chrysler. After 3 years from the bailout, “The No. 3 U.S. automaker [Chrysler] made $1.7 billion last year thanks to big gains for its much-improved cars and trucks, and it's expecting profits to reach $2.2 billion this year.” After having a dramatic low point in 2009 it has risen from its destined grave and has returned healthy and stronger than ever. Although Chrysler has showed growth, on the other hand General Motors has been reported that investing in it has proved that is was unwise to do that in the first place. After a bailed out corporation begins to succeed, it begins to repay the government, with interest, through its revenues, such as banks. When the national Treasury endows money to such businesses, a second opportunity is given for a company to get back on its feet and hopefully repay its loan.
A national investment is no different than a regular investment, which carries risk and uncertainty. Another infamous corporate bailout is that of the case of Fannie Mae and Freddie Mac, two major mortgage loaners whose “second opportunity” cost their company and the taxpayers billions of dollars. A respected financial website, Investopedia, had an article stating, “What brought down these giants [Fannie Ma and Freddie Mac] were mortgage loans to unqualified borrowers…[the two] sank deeper into financial trouble.” The situation was grave enough that the government had to take control over the businesses and loan money to them. Also, the company sank further more even with their financial support. Consequently, corporate bailouts don’t necessarily fix the flaws of a company nor have the absolute authority to change the standing policies possibly-continuously defective business. It is also imperative to recognize that the U.S. government doesn’t bailout ever distressed company calling for aid. Therefore, giving a second, or more,...

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