First National Brontosaurus HotlistIncidentally, anyone who identifies as a liberal or progressive really ought to check out DailyKos. In my opinion it is simply the best lefty clearinghouse of information there is.
Sun Nov 02, 2008 at 09:18:41 AM CDT
This week, a letter authored by a quintet of governors arrived on the desk of America's most powerful official -- Treasury Secretary Henry Paulson. Unlike most of the traffic passing over Paulson's transom, this letter wasn't about another shaky financial giant, instead it was about an industry "...vital to millions of citizens in our states and across the country." It was cars. This time it was the automotive industry hoping to score some of the bailout cash. And their argument was a familiar one -- the Big Three automakers are too big to fail.
That's a phrase that's becoming all too common these days. AIG was too big to fail, so was Bear Stearns, and Fannie Mae and Freddie Mac. What's the proposed solution for shaky giants too big to fail? Get bigger. Wachovia was too big to fail, so arrangements were made for it to be joined into a bigger entity. The top thing on the automaker's list was loan guarantees that would allow ailing GM to buy also ailing Chrysler. A big part of what the treasury is up to right now is encouraging mergers between financial entities, and even without the prodding of Treasury, these companies are eying each other like students at an eighth-grade dance; sure that their misery would be decreased if they could only find a partner.
The trouble with that is, it's the wrong direction. Mega-mergers aren't the solution to the issue, they're an aggravating factor. And if we don't revise our thinking, we'll soon reach a new distinction: too big to survive. Because the truth is, big doesn't make you safer. Larger equals riskier.
Any evolutionary biologist could tell you that.
Sunday, November 2, 2008
A FASCINATING read from Devilstower over at DailyKos.