Saturday, 13 January 2018

Letting Carillion Go

Capitalism is great until you run out of other people's money and then it's either go bankrupt and employee's lose their jobs or you look for a handout of other people's money which is exactly what the banks did back in 2008 and the reason why the economy has sucked ever since.
Now the Government have a decision to make as Britain's second-largest construction group is on the brink of collapse and the banks are refusing to lend them credit and it is towards the Government and the tax payers they are looking for a £2 billion payday.
Carillion are holding emergency talks with ‎Whitehall officials to borrow significant amounts of new funding from its existing lenders but only if the Government agrees to guarantee payments if they default.
'Without that commitment of support from the Government, administration is all but inevitable' said a Carillion spokesman but the noises coming from the Government is that ministers had decided against providing a direct financial bailout to loss-making Carillion and were also likely to be lukewarm about being guarantor for them reflecting the Governments precarious grip on Parliament
especially if the taxpayer is landed with the £2 billion bill.
The company falling would affect the 19,500 people employees and 20,000 pension scheme members in the UK and cause considerable disruption given Carillion holds so many government contracts from building hospitals to managing schools.
Especially galling is that in 2016 it had sales of £5.2bn and until July 2017 the company was worth £1bn and paid out bonuses to the managers and dividends to the shareholders so to come begging for taxpayer funded bail-out which will add a further £2 bn to debt won't sit well in the age of austerity.
The government has said that contingency plans are in place and it is closely monitoring the situation as long as that doesn't mean a repeat of 2008 when the banks privatised the profits but where very quick to socialise the losses for which we are still paying for a decade later.


Keep Life Simple said...

at least with capitalism there is a point in time when somebody has money.

i always forget how little you know about economics and how much you despise personal property rights. well, except for little plot on the moon. you little in-the-closet capitalist you

Falling on a bruise said...

You don't need to be an economics expert to know the point being to make as much profit as possible and run to the government for a bail out when all the money slips away.

Keep Life Simple said...

the government (under democratic/left control) has been trying to consolidate the banking industry for decades (because the democrats don't like capitalism and want Euro style national banks), so the government created the crisis by allowing, and actually encouraging mergers and acquisitions. the goal was to have 5 mega banks. Well, they got it. then when B of A (one of their creations) got in trouble the fed realized they screwed up. So, they saved the bank to cover their own asses. i do not believe in pure capitalism, but we got away from healthy capitalism very long ago.

when the government started manipulating the market, instead of keeping it competitive, they caused the problem.

they should have let B of A fail and let the top 10 or 15 regional banks buy the accounts. no consumer would have lost out. some owners would have taken a hit (caveat emptor). but the democratic party apparently had too much invested in B of A...

can't leave the government out of the blame game.