Re: Too big to fail?

On Wed, 18 Mar 2009 08:34:33 -0700, Islander <nospam@xxxxxxxxxxx>
wrote:

Evelyn wrote:
"Islander" <nospam@xxxxxxxxxxx> wrote in message
news:l4CdnX8D5clI8V3UnZ2dnUVZ_q7inZ2d@xxxxxxxxxxxxxxxxx
This is an expression that has come to be used pretty loosely. Most
people really mean "Too big to *let* fail."

"Too big to fail" is an expression often used in the financial
community that was intended to give investors confidence in these
companies. Sure, your money is safe! These companies are too big to
fail!

Of course, we know now that this is not true. They can, indeed fail.

"Too big to *let* fail" is an expression that is used to strike fear
in anyone who might question the need to bail out these companies.
This is an acknowledgment that we have allowed these companies to
become too large and too intricately tied to the health of the overall
economy. This is socialism by corporation. There is no difference
between this kind of corporate central management and governmental
ownership and central planning of an industry. Well, there is a
difference - the pay scale for top level management!

I am now hearing more people argue that we shouldn't allow companies
to get this large. But, what did several of these companies do with
the initial TARP money dispensed by Paulson under the Bush
administration? They bought up other companies, thereby becoming
larger and, unfortunately, even more "too big to let fail." Somehow,
the Bush administration even thought that this was a good idea and
facilitated it.

It is time to break them up, cut loose the healthy parts and see if
there are any high rollers who want to speculate on what is left.
Want to bet that if anyone did buy the financial services division of
AIG that they wouldn't fire all the top level management?



Breaking up a massively huge company worked out quite well for the
telephone business. My phone bills are a lot cheaper nowadays for it,
but it was a long time coming for the effects to fully kick in.


I agree that the breakup of AT&T was a good thing but there are still
people who will argue that it was not. I witnessed this from the point
of view of advanced technology and the deep seated belief that the
breakup would threaten the value of the research that came out of Bell
Labs. I saw the other side of that where AT&T hoarded that technology
and delayed application in the broader industry. The transistor is the
best example.


And now the transistor and our technology is almost completely gone
from the USA. What was Bell Labs is now owned by the French. The
break up might have been the thing to do but the manner in which it
was done was disgraceful and damaged the USA's communication industry
forever.
Thumper
.

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