1) What do you think the “too big to fail” position asserts?No, Its WAAAAAAAAAAAAAAAAAAAAAYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY past time to have looked the "too big to fail" arguements and called them what they are, Bull****. With a capital B and a capital S.
1) What do you think the “too big to fail” position asserts?
2) Exactly how do you propose to assert that they are BS?
There-in is part of the problem, that nutshell is missing a very important part. It is better put that they are too large and critically interconnected within the economy to fail and be dismantled safely with the current legal system to do so.1) It asserts that there exists in our country businesses that are too large either physically or fiscally or both to be allowed to fail because of percieved negative effects on the national or state economy. Thats the nutshell version.
There-in is part of the problem, that nutshell is missing a very important part. It is better put that they are too large and critically interconnected within the economy to fail and be dismantled safely with the current legal system to do so.
We (the royal we) have already faced “too big to fail” at wide scale, a prime example being back in the late 1920’s and early 1930’s. The response, after the initial laissez-faire (with a very poor outcome), was in part to institute the FDIC for banks. There was already bankruptcy laws on the books but they proved insufficient for the banking industry, as the economy had evolved and progressed in using them. The problem had to do with both speed at which the bankruptcy was executed (so assets could be divided and dispersed) and the level of insolvency that the banks could reach (thus shortage of assets to pass out to creditors), coupled with their tight ties though out the economy. It was not a matter of ensuring a bank would never fail, it was a matter of having a better chainsaw (and authority to use the chainsaw) to chop it up and move on quickly coupled with triggers and boundaries to keep the job at a size that the chainsaw could handle.
And it worked [well], and continues to work, for 80+ years for the institutions that it was targeted at.
What has happened is that AIG, and others such as Citibank, blurred the lines with the banking industry (and partially due to particular dismantling of key aforementioned boundaries were allowed to blur the lines) and also became similarly key, widely interconnected components of the economy. But we did not build the chainsaw for them, as they exist. Citibank is only partially a bank. AIG never was a bank (although there were insurer rules that they sort of colored outside the lines on). Why AIG was/is so critical has to do with the role of insurance in our economy, and the level of marketshare that AIG had. If those policies, Trillions of dollars worth, fall our economy grinds to a halt. Maybe you do not understand this but it is the case, and I will save time by not going into it.
So now we need a bigger chainsaw (and accompanying rules of operation to keep the chainsaw relevant, maybe requiring some partial dismantling of existing problem children). Thus we can within a few days shutdown, chop up, and move on from say Citibank or AIG failing in the same way that we do 100’s of times a year with banks like Joe Sawbuck’s First National Bank of Duluth.
Presto, no more “too big to fail” without removing the [critical] scenario of failing.
Can I ask, given your vast coversancy in business and investing matters, what do you think the difference is between a bank in the US going bankrupt and, say, Borders Group, Inc. going bankrupt?I am quite conversant in business and investing matters.
Chainsaw? Please clairifie what rules are needed besides the standard bankruptcy rules.
Can I ask, given your vast coversancy in business and investing matters, what do you think the difference is between a bank in the US going bankrupt and, say, Borders Group, Inc. going bankrupt?
Well I am satisfied you really do not understand the difference with how FDIC covered institutions are handled from run-of-the-mill corporations.Primarilly the depositors into the bank. They may lose a portion or all of their deposite. Satified?
If I were the gov I would counter sue AIG for wasting tax payer money.
AIG: Thank You America, But We May Sue You - Forbes
un****ingbelievable
AIG would be nothing but a memory had the government not (wrongly) chosen to shore it up so that it could pay out the extensive claims due during the meltdown
but now it is contemplating joining in a lawsuit filed by its former CEO (the one responsible for its financial quagmire) against the USA
and here is the basis:
the bailout provided funds so it could pay out is obligations 100 cents on the dollar (when it was over extended by Trillions)
and
AIG was forced to sell some of its prized assets
how dare we make a loan to a company and also condition that loan such that AIG was required to sell something of its own to be able to afford to pay its just obligations!
if AIG enjoins this suit against our nation, it will exhibit more gall than even charles degaulle
The government is in breach of the fifth amendment pretty blatantly here. Just like they breached the fifth amendment by taking up shares of GM when they bailed them out.
They didn't waste the money either considering the taxpayers came out ahead.
Primarilly the depositors into the bank. They may lose a portion or all of their deposite. Satified?
The government is in breach of the fifth amendment pretty blatantly here. Just like they breached the fifth amendment by taking up shares of GM when they bailed them out.
They didn't waste the money either considering the taxpayers came out ahead.
here is the complete text of the fifth amendment; please share with us the blatant breach committed by the US government:The government is in breach of the fifth amendment pretty blatantly here. Just like they breached the fifth amendment by taking up shares of GM when they bailed them out.
They didn't waste the money either considering the taxpayers came out ahead.
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
Since the shares were worth nothing, your argument doesn't hold water. Nobody was willing to buy GM stock; it was going to be sold off in an asset sale and disappear. So the government "took" worthless stock and made it valuable again.
Read up a bit about the Depression and you may come to understand that banks and credit are not like other businesses that we can blithely let go under.
First off, they were purchased, as in funds were paid AKA invested. Second off, loss of ownership (stock) by stockholders is standard, and zero payout common, when a company goes bankrupt. They are last in line for payout. Are you seriously questioning the Constitutionality of bankruptcy law via the 5th?My argument is not dependent on the value of the stock, but instead the existence of the stock being taken by the government. I'm sorry, but the government did not have the authority to take the stock, period.
In Imaginaryuniverse, maybe. Not so much here in reality.They did in Iceland.
First off, they were purchased, as in funds were paid AKA invested.
Second off, loss of ownership (stock) by stockholders is standard, and zero payout common, when a company goes bankrupt. Are you seriously questioning the Constitutionality of bankruptcy law via the 5th?
AIG: Thank You America, But We May Sue You - Forbes
un****ingbelievable
AIG would be nothing but a memory had the government not (wrongly) chosen to shore it up so that it could pay out the extensive claims due during the meltdown
but now it is contemplating joining in a lawsuit filed by its former CEO (the one responsible for its financial quagmire) against the USA
and here is the basis:
the bailout provided funds so it could pay out is obligations 100 cents on the dollar (when it was over extended by Trillions)
and
AIG was forced to sell some of its prized assets
how dare we make a loan to a company and also condition that loan such that AIG was required to sell something of its own to be able to afford to pay its just obligations!
if AIG enjoins this suit against our nation, it will exhibit more gall than even charles degaulle
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