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If something is so big that it creates disaster if it fails, then why on Earth does it even exist?!

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ck4829 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 01:49 PM
Original message
If something is so big that it creates disaster if it fails, then why on Earth does it even exist?!
Is it in our interest to have companies that are so massive that if they fail, then it can create the possibility of national and even global disaster?

The Big Banks were on the edge of collapse, and we gave them a bailout, because if they failed then we'd be in a depression or our economy would collapse.

If there weren't so many big banks, our economy wouldn't be in danger.

But have we learned from our lesson?

The banks aren't getting any smaller, are they?

And then there's more...

The telecoms are only getting bigger, if network neutrality fails, they will become massive. What happens to telecommunications if big telecoms fail?

Big oil is also a concern that is only getting more problematic. Every quarter, big oil companies celebrate record profits, but there is a ceiling. And, what will happen to big oil, and more importantly, our energy supply, when big oil fails?

The solution seems to be tighter regulation and making sure corporations never get so large that their failure can become a threat to national and global security.
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Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 01:52 PM
Response to Original message
1. Bernie Sanders said that, didn't he? "If it's too big to fail, it's too big to exist."
I believe we need to nationalize all the indispensable monopolies and oligopolies: the energy companies, the railroads, the gigantic banks....
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FormerDittoHead Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:04 PM
Response to Original message
2. Yes. They should have never been ALLOWED to grow as they did.
They justified their growth, ie the mergers since the 80's (the SEC, FTC, etc has to approve these things, it's not out of the purview of the government) by saying that their larger size would REDUCE risk (and therefore increase return).

Of course, our fearless leaders never considered that while they were buying up each other, they were REDUCING COMPETITION IN THE MARKET.

But that's not the issue of topic.

The current situation was a lesson of TITANIC (ahem) proportions, and now we know the dangers of letting so much capital be in the control of so few people and to let them regulate themselves.

Turn a new page in the economic and financial textbooks. What do we call the prior chapter? When free markets fail, again...
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Mika Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:07 PM
Response to Original message
3. You mean, like the environment?
:shrug:


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ck4829 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:08 PM
Response to Reply #3
5. We can't break up the environment into smaller mini-environments
Edited on Sat Mar-07-09 02:10 PM by ck4829
But we can for the banks, big oil, and the telecoms.
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LuvNewcastle Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:07 PM
Response to Original message
4. There used to be regulations that disallowed
interstate banking here in MS. Also, a bank could have no branches that were more than 200 miles from the main bank. Our smaller local banks are doing just fine right now.
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Tierra_y_Libertad Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:09 PM
Response to Original message
6. Because the folks "regulating" them get payoffs from them.
aka: Campaign Contributions
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Raven Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:09 PM
Response to Original message
7. Stop confusing me with common sense, will ya? :-)
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kestrel91316 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:34 PM
Response to Original message
8. Why? That's simple: HUBRIS.
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HysteryDiagnosis Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 02:59 PM
Response to Original message
9. It's interesting how we have created a ticking timebomb and
gathered around it, worshipping its ability to destroy us. Nope, the stock market shouldn't be able to do what it does, the CEOBOZOS shouldn't get what they are paid, the traders shouldn't be able to circumvent the rules... we have created a monster that will consume us due to our own selfish natures.
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applegrove Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 08:25 PM
Response to Original message
10. Canada has huge banks. And they didn't fail. Because they were properly regulated.
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