Too Big To Fail?

8 09 2008

Amidst the hurricane news, the Browns news, the Tom Brady news, the Wall Street news, and the shitty news news, is the mortgage news.  In case you haven’t heard, the U.S. government seized control of Freddie Mac and Fannie Mae (who the fuck came up with the names of these companies?) in a corporate bailout of epic proportions according to the Wall Street Journal (and many other reputable news sources, but that’s where I heard it). 

So I was reading a little online and came across this article from the International Herald Tribune.  The writer asks “How many corporate bailouts are too many?”  Which is a good question, because in a market economy, some businesses are supposed to succeed and some are supposed to fail.  There’s a lot of ethical concern about why some companies are judged to be too valuable to the economy to tank.  The writer ponders which industry will be next to be fed by the oft generous hand of Uncle Sam.  Will it be the airline industry?  The American automakers?  Who knows….  Not only that, but will it be the market making them fail, or will corporate execs expend great amounts of time, money, and energy pursuing pipe dreams and ruining lives, only because they know that the government will bail them out?

Look at companies like Enron, WorldCom, etc…. nobody bailed them out and they are pretty important.  The economy didn’t collapse.  So who’s to say that if these yokels died (a corporation is kinda like a living person), the economy wouldn’t react the same way?  Think about it.  Make up your own mind.  Not that it really matters, I don’t think we have the power to change this practice (would be sweet if we did tho).




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