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U.S. Government Bailouts - Essay Example
Finance & Accounting
Pages 7 (1757 words)
Government bailout is a maritime colloquial used in the financial sectors in reference to the process in which the government provides financial assistance to leading corporations thereby preventing them from falling or facing an imminent collapse…
The transport industry, for example, is the American economic backbone. The industry sustains trade and the travel of people throughout the fifty-two states. The country therefore requires an efficient and elaborate transport industry that does not face any serious financial challenges, which may weaken its operations (Muolo 41). To ensure this, the government provides tax reliefs and financial incentives to bigger corporations in the transport industry, which include oil companies, airlines among other stakeholders in the industry. The bailout is a maritime term inferring to the process of removing water from a sinking ship using smaller buckets.
The term is used in the financial sectors therefor to refer to the nature in which the government gives financial aid to its major corporations during difficult financial times. Bailouts are often formulated and implemented through acts of parliament; the lawmakers discuss the economic situation and therefore determines the appropriate amount of money capable of ensuring that a corporation stays operational despite the financial challenges at the time. The government gives out the money in a form of a loan, which the company pays later after it stabilizes its operations. Additionally, the government gives out the bailouts in the form of grants or through the purchase of shares of a poorly performing corporation. ...
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