Government support of companies?

[DJG]

Reading through the Beginners section:

I notice alot of people talking about Government Support.

So, how does it help a stock and the company.

My guess:
When the company is struggling/going through rough patches, the government help financially?

Thanks

Dan

P.S - Do lot's of investors, invest in gov't supported stocks, due to them being "safe".

 

[Whiskers]

Government support can range from disaster relief payments in droughts and storms to subsidsed employee training to partnering or subsidising development of new technology and new industries to building infrastructure like new roads and ports to assist the movement of people and resources.

 

[DJG]

Is there any downside to Gov't support?

High interest rates, high debts?
Or do they eventually pay the gov't back with tax

 

[Trembling Hand]

I cannot think of any industries that receive significant "Government support", read tax payers money, that are strong and therefore ones which you would want to invest in.

Car industry? Nope
Textiles? Nope.
Drought ridden farms? Nope.

And of course if a company relied on the whims of a Minster to survive I couldn't think of anything more unsafe. its surely a signal to stay away as an investor.

 

[Bushman]

My guess:
When the company is struggling/going through rough patches, the government help financially?

Err no. If they are insolvent then they go broke and equity investors usually lose their dough.

Google HIH, Allco, Ansett, Bond Corporation etc.

In the US, the government has bailed out the banking/insurance sector (i.e. Citi, AIG etc) as the failure of these institutions were deemed to pose a systemic risk to the financial system. Thus, if they failed, all bets were off.

 

[akkopower]

GDY appears to be one of these companies. For anyone not familiar they are trying to generate energy by pumping water under super high pressure into the earths crust where heat generating rocks will heat this water to abt 200 deg C.

From my understanding in the last 12 months this company has been given $107 million or so during the last 12 months by the federal gov and the NSW gov. Someone who is familiar with this company might be able to clarrify/verify this.

 

[So_Cynical]

GDY appears to be one of these companies. For anyone not familiar they are trying to generate energy by pumping water under super high pressure into the earths crust where heat generating rocks will heat this water to abt 200 deg C.

From my understanding in the last 12 months this company has been given $107 million or so during the last 12 months by the federal gov and the NSW gov. Someone who is familiar with this company might be able to clarrify/verify this.

GDY has been the recipient of Grant money from the federal Govt and prob some state Govt's because they qualified for that money...when Govt's want something new to happen they usually give away money to help that to happen, this is nothing new and has been going on for decades.

GDY isn't trying to produce power from hot rocks, they have already done that, now there moving on to the next stage of development...in NSW there doing some exploratory drilling....ive no idea of the total amounts of grant moneys received....CWE - Carnegie wave energy, is another Green energy player that has received some grant money...about 12 million from the WA Govt i believe.

Some links to funding programs below.

http://www.environment.nsw.gov.au/grants/ccfred.htm
http://www.ret.gov.au/energy/energy programs/cei/acre/redp/Pages/default.aspx
http://www.dec.wa.gov.au/content/view/3550/1/