The economic plan

The American government has worked out ways to deal with this and future economic uncertainties. With this news confidence was restored and share prices started to rise. Big surprise there, let me explain.

The main 'outs' for this used to be as follows:

1. The company in question took a loan from another company,
2. The company took a loan from the Bank of England or Federal Reserve,
   
3. The company was taken over by another, or
   
4. The company was shut-down

Well as we know option 4 is considered unacceptable; option 1 ain't gonna happen anytime soon; which just leaves us with options 2 and 3. Except 2 seems to cause a run on the company and 3 may create a super company with too much influence. Oh dear.

Never mind the government has come up with two new methods

1. Invest in the company, or
2. Take on the bad debt themselves

Why the jubilation? Well look closely at the difference, previously money was loaned this meant it was expected to be paid back with interest. If the company went pfut the money was still owed to the government. However investing means that we give you money and if you make a profit we want our share; if the company goes pfut then so does the money. Likewise with bad debts, they're bad because the company doesn't expect them to be paid so the government will buy them from the company and try to get the money themselves (no doubt with as much success)

What this boils down to is the government saying 'Continue taking the same high-risk high-gain ventures that got everyone into this mess because now we'll take the burden of the risk off your hands' Share prices started to rise again? Wow I'm so shocked.

Oh and of course for 'we' and 'government' read 'us' and 'taxpayers'.