Hey there! Sign in to join this conversationNew here? Join for free

Mcdonalds Bailed out by the US Federal Reserve Bank Watch

    • Offline

      2
      I think there are more shocking revelations than this, such as the Federal Reserve helping foreign banks. But yes, America should definitely audit the Fed to see exactly what they are doing. I agree with those who say that we live in a corporate state, where the government and big business scratch eachothers backs. That isn't capitalism, a true capitalist believes that when you fail, you should go bust. But is there any evidence anyway that without this $203 million McDonalds would have gone bust and everybody working for them would have lost their jobs?
      Offline

      0
      ReputationRep:
      Course, how did you think you get a toy in every happy meal?
      Offline

      20
      ReputationRep:
      (Original post by Don John)
      But then thousands of people would lose jobs, and share prices in the FTSE would crumble.
      Companies go bust all the time, remember Woolsworths? A lot of people lost jobs but plenty found new ones, I don' think its enough reason to give hundreds of millions of taxpayer's money to a private company. There are plenty of other fast food chains that would be more than happy to fill the niche left by Macdonalds had it gone bust and take on the staff to increase their capacity.

      Don't forget a lot of MacDonalds resturants are franchises so even if MacDonalds went bust, the franchise holders would still trade and I'm sure investors will buy up the company and keep it going because its a very strong brand.

      Can't blame Macdonalds or any other company for taking cheap money though. I would have done the same if it was offered to me.
      • Thread Starter
      Offline

      0
      ReputationRep:
      (Original post by Dream Weaver)
      you're joking, right?
      of course not
      • Thread Starter
      Offline

      0
      ReputationRep:
      (Original post by CandyFlipper)
      I think there are more shocking revelations than this, such as the Federal Reserve helping foreign banks. But yes, America should definitely audit the Fed to see exactly what they are doing. I agree with those who say that we live in a corporate state, where the government and big business scratch eachothers backs. That isn't capitalism, a true capitalist believes that when you fail, you should go bust. But is there any evidence anyway that without this $203 million McDonalds would have gone bust and everybody working for them would have lost their jobs?

      many corporations would have failed if they didn't get bailed out

      AIG , the big american car companies, Goldman Sachs ...
      • Thread Starter
      Offline

      0
      ReputationRep:
      ..caterplillar, Harley davidson, american express
      Offline

      0
      ReputationRep:
      (Original post by CandyFlipper)
      I think there are more shocking revelations than this, such as the Federal Reserve helping foreign banks. But yes, America should definitely audit the Fed to see exactly what they are doing. I agree with those who say that we live in a corporate state, where the government and big business scratch eachothers backs. That isn't capitalism, a true capitalist believes that when you fail, you should go bust. But is there any evidence anyway that without this $203 million McDonalds would have gone bust and everybody working for them would have lost their jobs?
      I'm pretty sure it was just a temporary loan because the banks weren't lending properly. Everyone knows McDonald's is a fundamentally sound business, with an amazing business model. Like I said before, people can just consider the money they loaned them to be the first 2 weeks of welfare they would have had to have given all their redundant employees if it makes them feel any better!
      Offline

      0
      ReputationRep:
      (Original post by Maker)
      Companies go bust all the time, remember Woolsworths? A lot of people lost jobs but plenty found new ones, I don' think its enough reason to give hundreds of millions of taxpayer's money to a private company. There are plenty of other fast food chains that would be more than happy to fill the niche left by Macdonalds had it gone bust and take on the staff to increase their capacity.

      Don't forget a lot of MacDonalds resturants are franchises so even if MacDonalds went bust, the franchise holders would still trade and I'm sure investors will buy up the company and keep it going because its a very strong brand.

      Can't blame Macdonalds or any other company for taking cheap money though. I would have done the same if it was offered to me.
      A) Woolworths genuinely failed. It was an unsound business model that had been stamped into the ground by places like Wilkos and the internet. They had no possibility of paying the money back.

      B) McDonalds hires 1/600 people in America - or $225 per employee, for a short term period. Woolworths hired approximately 1/2000 people employed in the UK.

      C) McDonalds pays way over $1 bn per year in corporation taxes, so they were asking for 1/5 of that back to keep operating and keep on paying massive amounts of taxes into the fed.

      Letting McDonalds go down the shoot because of some short term liquidity problems would have been fool hardy, there's no point crying about them getting loaned a tiny amount of money. Lets not forget that those 1/600 employees they hire are only one rung above the very bottom of the work pile.
      Offline

      0
      ReputationRep:
      Mcdoodoo is a symbol of American Capitalism so it's only logical they'd help it out, not that I agree though
      Offline

      0
      ReputationRep:
      unfortunately that article is completely misleading.

      first, it may not be true. MCDs say it didn't happen, i'm not saying they are telling the truth but it raises questions.
      second, the "loan" was under the commercial paper facility. this facility was started not because firms were having any operational problems but due to liquidity problems in the commercial paper market. you could fault their use of commercial paper but most wouldn't, MCDs is mainly franchises and this kind of borrowing is pretty standard. the other point is that the paper was asset-backed not unsecured, so the chance of losing anything was minimal.
      third, MCDs at the end of 2009 had over $2b in cash on hand.
      fourth, MCDs are clearly good credit. there is the incorrect assumption that because they were loaned money by the government they were bad credit. to rephrase it another way, these programs (in this case) weren't anything to do with bailing anyone out they were about liquidity. basically what appears to have happened is that the Fed rolled over all CP maturing in 09 ($230m). if MCDs couldn't have rolled this over it appears that at most, it would have had to stop share repurchases. the reasoning appears to have been that if MCDs tried to roll the debt and couldn't it would cause problems for other weaker issuers. either way, it would have been a bad choice to let a profitable company go bust. for the Fed this was an easy win-win situation.
      fifth, the source is clearly ****ing ****. if anyone is actually interested there is stuff on bloomberg that is more informative, less hysterical and more accurate.

      this also demonstrates why although the Fed should be audited it shouldn't be done publicly...people are stupid.
     
     
     
    Reply
    Submit reply
    TSR Support Team

    We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

    Updated: December 8, 2010
  1. See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  2. Poll
    What newspaper do you read/prefer?
    Useful resources

    Groups associated with this forum:

    View associated groups
  3. See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  4. The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.