Plagiarism

If you read this blog, you will know he stole this from me. Even the wording is practically the same. Plagiarism.

If They're Too Big To Fail, They're Too Big Period
via Robert Reich's Blog by Robert Reich on 10/21/08
According to Treasury Secretary Hank Paulson, the biggest Wall Street banks now getting money from the government are just "too big to fail.” Fed Chairman Ben Bernanke uses a different euphemism – he calls them “systemically critical.” The point is that if any of them goes down, it could take the whole financial system with it. So we taxpayers have to keep them up.

We’re hearing the same argument elsewhere in Washington for saving General Motors. It’s just “too big to fail.” So Congress is considering a bailout that would keep GM afloat and sweeten a merger between GM and Chrysler.

Pardon me for asking, but if a company is too big to fail, maybe – just maybe – it’s too big, period.

We used to have public policies to prevent companies from getting too big. Does anyone remember antitrust laws? Somewhere along the line policymakers decided that antitrust would only be used where there was evidence a company had so much market power it could keep prices higher than otherwise.

We seem to have forgotten that the original purpose of antitrust law was also to prevent companies from becoming too powerful. Too powerful in that so many other companies depended on them, so many jobs turned on them, and so many consumers or investors or depositors needed them – that the economy as a whole would be endangered if they failed. Too powerful in that they could wield inordinate political influence – of a sort that might gain them extra favors from Washington.

Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies. They’ve prodded Bank of America to take over Merrill-Lynch and Countrywide. JP Morgan to acquire Washington Mutual and Bear Stearns. And now they’re urging General Motors to absorb Chrysler.

So we’re ending up with even bigger giants, with even more power over the economy and politics, subsidized by taxpayers, and guaranteed never to fail because they’re just ... too big.

Proposal

Here's my idea. It appears to be becoming a habit that we rescue companies with big chunks of government money because they are "too big to fail."

What if we decided that if they are too big to fail, they are also too big? Period. What if we decided that this was the perfect definition for the violation of anti-trust? What if the condition for accepting government bailouts was that you had to break your company up into a lot of small ones?

I thought of this the other day and have become quite fond of it. Then these nice small companies could die to their heart's content. There would be a transition, just as there is with any anti-trust break-up.

It would be the company's choice: work out your own solution to your financial problems or accept government money and break up into smaller companies. For me this is a traditional capitalist solution, contrasting sharply with the socialist solution where the government buys into the corporations.

Republicans

The Republicans did well when they nominated John McCain. They did well because he was the only well known Republican that was perceived as at least a little bit independent of George Bush.

Then they messed it up by failing to establish a campaign that clearly distinguished John McCain from W. There is nothing about the administration of George W Bush that we want to continue. If we can't tell the difference between Bush and McCain, Obama wins.

Greenspan

All this hind site is starting to get on my nerves. The NY Times is now ragging on Alan Greenspan, blaming him for everything. I can remember when he was practically sainted.

I would like to remind everyone that I sold my house two years ago and now live in a ratty apartment because I completely saw this coming. It's almost time to buy. Not quite. Now that everyone has seen the light, things may start to improve.