I get why a bailout can be important for the economy but I don’t get why the company just gets the money. Seems like tax payer money essentially is “buying” the company to me but they get nothing out of it.
Edit: whoa i woke up to a lot of messages! Some context to my question is that I am not from the US myself but I see bailout stuff in the news and as I understand it, the idea of capitalism is understood that “if you succeed then you make money and if you fail you go bankrupt and fold or get bought out” hence me wondering why bailouts are essentially free money to a company to survive which in my head sounds like its not really fair because not all companies are offered that luxury.
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The term “bail out” does not have a specific meaning. A more technical term would be “rescue,” which could mean one of several things depending what kind of trouble the company is in. Usually, it means that the company owes money to someone, and the government steps in to make that payment. In most cases, the goal is not to save the company, but to save the people the company owes money to. For example, the company’s employees, customers, or lenders.
If the money is structured as a loan, the company’s ownership will not change. If you borrow money using your house as collateral, you aren’t selling your house. You are entering into a contract where you *may* have to hand over your house under certain conditions.
If the money is structured as equity, this is a partial or total nationalization. That means the company’s ownership does change.
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