tag:blogger.com,1999:blog-10424035.post2738677681588322647..comments2023-09-11T08:58:24.710-06:00Comments on Reach Upward: Can AIG Fail Softly? Should It?Scott Hinrichshttp://www.blogger.com/profile/11831447472339880148noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-10424035.post-56392990500685999662009-03-23T20:30:00.000-06:002009-03-23T20:30:00.000-06:00You are absolutely correct. That is exactly why w...You are absolutely correct. That is exactly why we are in this pickle and exactly why nothing will be done to get us out of it. <BR/><BR/>Actually from what I read earlier this evening, the house of cards may tumble quite a bit further. Apparently both China and the IMF are discussing replacing the dollar as the world's reserve currency. I would recommend buying a wheelbarrow now so you can fill it with dollars and push it to the market when you need another loaf of bread.Charles Dhttps://www.blogger.com/profile/02975241234146573609noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-7907682513267561092009-03-23T16:12:00.000-06:002009-03-23T16:12:00.000-06:00"No businessman would be this stupid, why should o...<I>"No businessman would be this stupid, why should our government?"</I><BR/><BR/>Because nobody does stupid quite as well as the government. I know. I saw it first hand when I worked there. (I'm not saying that private business can't be stupid. But government consistently excels at it.)<BR/><BR/><I>"There is no reason to permit a financial institution to get so large and so tightly integrated into the global financial system that its failure threatens our entire economy."</I><BR/><BR/>Sure there is. When a business (or group of businesses) can lobby politicians to protect them from competition and repeal laws designed to promote competition, there are plenty of reasons — often denominated in greenbacks — to ensure that some companies become "too big do fail."<BR/><BR/>What is the definition of "too big to fail" anyway? It appears more and more that it simply a measure of how many powerful politicians you have on your payroll.Scott Hinrichshttps://www.blogger.com/profile/11831447472339880148noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-33361686710618042872009-03-23T12:39:00.000-06:002009-03-23T12:39:00.000-06:00In the current situation (under both Bush and Obam...In the current situation (under both Bush and Obama), the government seems intent on funneling billions (trillions if you include the Federal Reserve's giveaways) into failing businesses with no control whatsoever on what they do with the money. The fear of seeming socialist is causing the waste of taxpayer dollars by the truckload and not helping the economy recover.<BR/><BR/>We have a scenario where the government has given certain corporations sums that are more than 10 times the value of every single share of stock currently on the market, yet the government doesn't attempt to exercise control. No businessman would be this stupid, why should our government?<BR/><BR/>Why not simply declare AIG, Citigroup, BofA and the rest bankrupt, take them over just as the FDIC would take over your local bank if it failed? Then the executives would get nothing except a pink slip, the shareholders would get nothing since they didn't do their job either, the creditors would get pennies on the dollar, and then the corporation could be broken up into pieces small enough to fail and sold back to the private sector. <BR/><BR/>There is no reason to permit a financial institution to get so large and so tightly integrated into the global financial system that its failure threatens our entire economy. We used to have laws against this sort of thing. We had a law that did not permit a single company to own a bank and an investment bank or an insurance company. We had laws requiring insurers and banks to have adequate capital reserves to meet their obligations. We had laws that would have prevented the marketing of exotica like collateralized debt obligations and credit default swaps. All those laws got repealed in the name of the "free market". Well it looks like the invisible hand is giving us the finger.Charles Dhttps://www.blogger.com/profile/02975241234146573609noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-38324636908732884502009-03-23T12:02:00.000-06:002009-03-23T12:02:00.000-06:00Thought provoking as always. In this case I am thi...Thought provoking as always. In this case I am thinking about your final question - "is this solution really any better than what we now have?" I don't know the answer to that, but I think we should also consider whether that is the right question in this case. Is it possible that our current situation is one that warrants the alternate question - "is this solution really any worse than what we now have?"Anonymousnoreply@blogger.com