The reason is the new company knows they will not be bailed out if they encounter a similar situation in the future, thus the expectation is they would be more careful in managing cashflow and saving for a rainy day.
Say you're a business that has razor thing margins but huge turnover, like airlines for example.
Do you need to save for 14 rainy days, or 1400? When your war chest is exhausted do you then go looking for bailouts?
I suppose one answer is to allow government bureaucrats and industry interests to nut out some regulations, but that's different to what you're suggesting.
An appropriately sized war chest is one that lets you live through the next recession.
The reason people are angry is because individual citizens are left to figure it out on their own when a downturn happens, but corporation's are allowed to be flagrantly irresponsible and then still get massive subsidies or bailouts when in trouble.
For everyone here coming up with excuses about how this is a good thing to bailout these companies, please answer me this.
Why do the leaders of companies in a recession always end up with more money from bonuses funded by the government bailouts, while individuals have to tighten their belts?
The average person doesn't believe your arguments when it boils down to "heads I win, tails you lose" everytime we have economic turmoil as a result of greedy actions by corporations
My point I was trying to make is that we are treating individuals with the cold hard truth of full boned capitalism, but when it comes to corporations we suddenly have all these excuses and help for them.
If we are fully capitalist then the only answer to the right sized war chest is one large enough for the next recession. Whether or not its difficult or impossible to determine what that size is, if you don't have one big enough your company will go into bankruptcy.
If that sounds like a ridiculous burden to put onto companies, _then why do we put it onto individual citizens?_
Say you're a business that has razor thing margins but huge turnover, like airlines for example.
Do you need to save for 14 rainy days, or 1400? When your war chest is exhausted do you then go looking for bailouts?
I suppose one answer is to allow government bureaucrats and industry interests to nut out some regulations, but that's different to what you're suggesting.