“I have a feeling, in a few years, people are going to be doing what they always do when the economy tanks. They will be blaming immigrants and poor people.”- Mark Baum, The Big Short.
In writing this article I wondered if I should detail the exact purpose and infrastructure of Carillion, the latest company which may cost taxpayers billions to bail out. The truth is Carillion is simply a carbon copy of the previous and next industrial company the government will outsource to and bailout using taxpayer money.
Over the last year, Carillion’s share price has depleted massively. A combination of an ever-growing pile of debt and an increasing amount of their shares being ‘shorted’ (a term described by Marketwatch as when “an investor borrows shares and immediately sells them, hoping he or she can scoop them up later at a lower price, return them to the lender and pocket the difference,”) at one point, an estimated 29 percent of Carillion shares were owned in this way.
This led the company’s share price to be extremely volatile, but even then they were awarded the government’s HS2 contract.
Why is this important? Well, this company is responsible for the jobs of 20,000 people and now owes billions in debt. Surely, it can’t be sustainable for the government to continuously bail out reckless big companies with a flick of the wrist, and with the other claim that there isn’t enough to pay for the public services which we urgently require. From the NHS and schools to police and fire services, Britain’s infrastructure is under considerable strain, but I cannot recall for one moment in my existence where a company like Carillion saved my life. I can recall when an ambulance service did. It appears, after all this drama, that we may not be able to afford millions for the NHS, but we sure can afford billions to bail out companies such as Carillion.
This all seems innocent enough, but when it’s even worse when you consider the fates of Carillion’s employees. Of the 20,000 made redundant, those in the public sector had their paychecks taken care of by the government, those in the private face a future of uncertainty. At the same time, Carillion’s fat cat bosses continue to get millions of pounds in bonuses. Seem fair? Companies like Carillion have had it easy for far too long, I can only imagine that this will be the Arab Spring for western capitalism.