Privatizing Profits And Socializing Losses

AAA

DEFINITION of 'Privatizing Profits And Socializing Losses '

A phrase describing how businesses and individuals can successfully benefit from any and all profits related to their line of business, but avoid losses by having those losses paid for by society. Privatizing profits and socializing losses suggests that when large losses occur for speculators or businesses, they are able to successfully lobby government for aide rather than face the consequences of said losses.

INVESTOPEDIA EXPLAINS 'Privatizing Profits And Socializing Losses '

The biggest example of privatizing losses and socializing losses came during the TARP bailouts of 2008-2009 in which the United States government bailed out numerous banks, insurers and auto manufacturers after they had sustained huge losses in their business dealings, in some cases through unacceptable risk tasking and lack of due diligence.

RELATED TERMS
  1. American Recovery And Reinvestment ...

    An act initiated and signed by U.S. President Barack Obama in ...
  2. TARP Bonuses

    A buzzword coined by the financial media during the financial ...
  3. Credit Crisis

    A crisis that occurs when several financial institutions issue ...
  4. Mortgage-Backed Security (MBS)

    A type of asset-backed security that is secured by a mortgage ...
  5. Troubled Asset Relief Program - ...

    A government program created for the establishment and management ...
  6. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
Related Articles
  1. Insurance

    A Review Of Past Recessions

    Here we look at the biggest economic declines in the U.S. since the Great Depression.
  2. Home & Auto

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  3. Entrepreneurship

    Government Regulations: Do They Help Businesses?

    These rules are in place to protect consumers and help businesses thrive at the same time.
  4. Mutual Funds & ETFs

    The 2007-08 Financial Crisis In Review

    If you don't know how the recession began, read on to learn more.
  5. Economics

    Venezuela Teeters On Edge As Oil Revenues Shrink

    Low oil prices have drastically revised the economic status quo -- dealing a destabilizing blow to oil-exporters like Venezuela due to falling oil revenue.
  6. Economics

    What Must The UK Do To Keep North Sea Oil Afloat?

    The UK government may need to take drastic action to ensure the viability of UK North Sea offshore oil production amid high costs and shrinking margins.
  7. Economics

    Analyzing Risks On The Upcoming UK General Elections

    Rising UK political risk keeps investors funds on the sideline.
  8. Economics

    Vladimir Putin: Rise to Power and Fortune

    An article about Vladimir Putin, where he studied, how he came into power, his net worth, and the current leverage he has on world politics.
  9. Stock Analysis

    A New Economic Threat: State-Sponsored Hacking

    State sponsored hacking attempts are becoming a major cause of concern to the US. Here is a list of US sectors most vulnerable to state-sponsored hacking.
  10. Economics

    Are Greece’s Worries Almost Over?

    Last week ended with the news that Greece and the European Union (EU) finance ministers struck a deal to temporarily extend the Greek bailout program.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center