Warning: Why Small Business Bailouts could Lead to Mass Bankruptcies
Published – April 13, 2020 12:42 am
Let’s talk bankruptcy. Investing & Negotiating.
The real bankruptcy risk to businesses is highly understated. The current bailout programs and systems setup for small businesses, medium sized businesses, and large businesses are highly flawed and risky, especially the PPP.
The PPP (paycheck protection program) could end up being a large scam for employers as employees are incentivized not to return to work thanks to substantial unemployment benefits, building up massive debts for businesses that’s entirely due in 2 years. Yet these loans may not be functional at all.
Ironically though, it’s not just the paycheck protection program. Even programs like the newly announced Main Street Lending program would likely have similar strings attached as for what we are seeing with the paycheck protection program and the airline bailouts. The airlines are already warning that strings attached to the airlines to massive bankruptcies.￼￼￼
Right now, the entire bailout system is a complete disaster. Maybe we need to look to countries like Germany and Switzerland who seem to have things more under control. At least in terms of bail outs. Because this, is unsustainable and could lead to a W shaped recovery instead of the V-shaped recovery or U-shaped recovery we are expecting.