9 thoughts on ““Too Big To Fail””

  1. After consideration, whenever I hear/read “Too Big To Fail”; I’ll substitute it with “Anti-Dog-Eat-Dog Rule”.

  2. http://www.realclearpolitics.com/2011/11/24/huntsman_declares_war_on_too_big_to_fail_267952.html

    Opening paragraphs:

    With a brand new proposal, Republican presidential candidate Jon Huntsman is the only GOP 2012er to have moved beyond “repeal Dodd Frank” (which sounds like a return-to-the-status-quo) and fashioned a serious and comprehensive — and bold — financial reform plan. He’s for repealing Dodd Frank, of course, but also a) reducing bank leverage by axing the deduction for interest payments and b) shutting down Fannie and Freddie.
    But eliminating “too big to fail” is really the core of what he’s trying to do.

  3. Oh, nuts, I didn’t read the link before commenting. Ok, I hereby ban myself for a month. See you in January!

  4. If they think banks are too large maybe they should start by not, you know, *subsidising* them. And if they insist on having government oversight, maybe they should insist that all assets are marked to market (or the minimum of market value and historical cost), instead of decreeing by law that sovereign debt of OECD countries is risk free. While they’re at it they could insist on a rough match in duration between assets and liabilities: long with long and short with short. They used to call this the Golden Rule of Banking, but clearly gold has gone out of fashion in policy circles. Capital adequacy ratios should be increased too.

  5. Robert Anton Wilson wrote that individual freedom is always threatened from large concentrations of power – either governmental or economic. After the government is cut back, next up should be the big corporations that were in bed with it.

  6. Incidentally, there’s two problems with limited growth of a financial institution while simultaneously keeping “too big to fail”. First, that there are economies of scale to many bigger financial institutions and second, that plus the promise of bailouts means there’s still considerable incentive to become “too big to fail”. Some businesses will find a way to circumvent any such restriction.

  7. Let one or two “too big to fail” economic entities fail and learning may actually take place. Painful learning, yes, but it seems that these days it’s the only way. These are the fruits of governmental elimination of risk in the lives of people and businesses.

    People would know the negatives of too big to fail if they suffered at the failure of one or two and debates like this needn’t occur. Nor would you need governmental interference.

    But lots of people want the “soft landing”….it’s the soft landing that prevents learning. The feedback mechanism has been disconnected.

  8. A quote from Michael Yon [unrelated to this topic but apropos]:

    “Dumb learns from pain. Insane just keeps bashing its head against the wall and expecting different results.”

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