NZ has no capital to do any such thing..
Only the NZ govt or american banks can step in - i'd rather the former.
Printable View
I agree, bad businesses should be allowed to fail and not bailed out. I think it sends out a dangerous message to big business that if they take on excessive risk and go bust they won't face the consequences of their actions.
Also I know very little about bankruptcy law but once bankrupt shouldn't the assets of the business be transferred amongst their creditors, and they should decide who to sell those assets to? Why should the government be involved with the sale of the assets?
The argument is, say it was Ports of Auckland, a bankruptcy/asset liquidation will have flow on effects that can damage the entire country. Unable to import export goods for Months etc, could lead to thousands of bankruptcies and major damage to NZ economy.
This is the too big to fail argument, but it should not mean that these businesses are Nationalised to stop this risk, obviously.
It's not like AIRNZ was being run poorly or unprofitably. It was a pandemic with global air travel shut down by Governments.
So none of the consequences you outlined are appropriate & the ramifications for creditors let alone the potential contagion effect could have had a much larger & wider impact on the economy.
The Government will no doubt sell down their increased equity stake for a substantial profit and meantime collect a dividend.
A much better result for all New Zealanders than the unnecessary catastrophe you propose.
Buffett says... Buffett this...
Do you bow when utter hus bane?
Deleted. Posted on the wrong place. sorry.
Charlie You are very intelligent. You are doing homework on major events. I agree always we must watch market carefully. Market is filled with all types of market players. If we study the past incidents, we can get better decisions in this investment world. To face those types of events in the future I buy future strong balance sheet firms at attractive prices who can generate cash. Some managers don’t have risk management systems in place to face for major events. Some blame government cannot run businesses while themselves cannot manage their business efficiently and productively. How many corporations failed over last 3 decades and how many people lost their money and even retirements. Tax money went for bailing out failed companies. It’s not too big to fall. Similarly, it’s not too small to be big. However, in every situation, there are opportunities for intelligent investors. These days people have get caught in growth traps. Recently, I sold one value trap and one growth trap. One of my rules is never stay in growth and value trap once I realized it. Number one rule is: invest in strong balance sheet firms to face major events in the future.