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Comment by cool_dude85 | Hacker News Reader

Bailouts usually make the government money in the long run if you ignore the costs.

Let's say the market rate for a loan like this is 4% and the government is loaning at .5%. Sure, the government has "made" .5% (less any defaults), but by any realistic understanding of what's going on, they lost 3.5%.

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The government goal isn’t to pursue good investments at a market rate. They are trying to prop up companies that investors don’t want to touch because of their current risk of failure. Spending some money now to keep a company in business can pay off in the long run, for example saving money on unemployment.

I absolutely agree, the government can certainly have other goals other than making good investments.

But don't muddy the waters by saying that they are making money on the program if they're giving below market loans. They might have good reasons to do it, but they're not making money on the deal.

They are making money though. The government doesn't make money for the government. It's not like a corporation. The government makes money for the country. Saving existing institutions from collapse during a disaster tends to be a very good investment for that.

When the Fed creates $xxx billion it "makes" money. The real question is whether the Fed bought something worthwhile.

The fact that a market coalesced around the asset isn't that significant because the Fed can't withdraw from the market now without watching prices for the asset collapse.

The point of my argument is that the government can save money by keeping a company from folding. Having a bad return of a couple hundred million is better than a loss to society of larger proportions. My point is to avoid the whole, a penny wise and a pound foolish, thing.

These companies have no penalty for firing people after receiving bailout money.

Well, pretty much all the bailout money requires that the business not fire anyone (or re-higher anyone that they did fire). For example, thats how the small business portion of the CARES Act worked.

The recent airline loans/bailouts require maintaining the same staff until September 30th.[1]

I would imagine that there will be layoffs once that requirement expires.

[1] https://www.businessinsider.com/airlines-coronavirus-bailout...

So the government is just punting on problems, again?

Serious question. I fail to see how bailing out mismanaged companies is worth more than an equivalent sum straight to people. Companies can be nationalized if they're essential. Can't raise the dead. Can't squeeze blood from a stone.

I don’t support bailouts of mismanaged companies, and I do think that sending money directly to the people helps substantially. A company not doing well during COVID-19 isn’t necessarily because they were poorly managed. Giving people money, and also keeping companies afloat helps on two fronts. People can survive now, and people still have a job to walk back to once this is all over.

Whether you read the statement as malice cloaked in corporate doublespeak, or simply following the rules that were laid out, there's no need to imagine. United, at least, has already warned that layoffs will happen October 1st.

"""But the challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as October 1."""

-Oscar Munoz, Chief Executive Officer, and J. Scott Kirby, President,

https://hub.united.com/united-message-munoz-kirby-2645729257...

Of course bailouts from the Fed "make" money. When the Fed increases its balance sheet by $2T, it "made" $2T. Indeed if it devoted the entire bailout to buying paperclips or Renaissance art, or S&P500 common stock, the prices of those things would go up (or go down less). However, the question is whether the Fed is buying things that are in the public interest.

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