Bailout
Candlefocus EditorNotable examples include the government bailout of American auto manufacturers after the Great Recession of 2008 and the Wall Street bailout that was enacted to prevent the imminent demise of major banking institutions. In both cases, it was the government that stepped in to rescue specific businesses in order to maintain stability and lessen the impact of the economic downturn.
Not all bailouts are limited to financial aid. For example, a bailout can also refer to a collective effort to help a business through times of difficulty. This includes providing advice and new ideas, strategic planning and interim management, to name a few. Governments may provide credits to reduce costs, tax incentives and other forms of aid to help a company come back from an economic slump. Governments may also provide direct subsidies as part of a bailout package.
The main goal of a bailout is to prevent a business from becoming insolvent. Whether it be from natural or man-made disasters, businesses need the proper help in order to stay afloat and not fall into debt. By reducing or eliminating the effects of the losses faced by a business, it increases the financial safety net that would help minimize the impact of further economic issues.
Ultimately, bailout packages are meant to provide stability, not just for the businesses that received it, but for the economies that rely on them. Every economic crisis is different, but by slowing the rate of financial decline, bailouts can provide the stability needed to restart an economy and create a better longer-term future.