11-24-2008, 10:54 PM | #1 (permalink) |
immoral minority
Location: Back in Ohio
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If companies are too big to fail, should they be broken up?
Wouldn't this help in fixing the problem? Sure, the people who are pro merger & acquisition wouldn't be happy. It's the idea that growth is always good and the market rewards that caused that. The CEOs and board would lose out by being broken up into smaller companies, but there would be more of them (and those are good paying jobs )
But it worked wonders for AT&T a few decades ago. I'm not sure if the roll out of cell phones would have been as fast had AT&T been the only company. Why would they want to update the landline market that is making them lots of money. Also, there wouldn't be nationwide long distance, higher monthly rates, and a bunch of other consumer benefits since more companies are competing for my business. Would the banking industry be helped by this? Would these banks have done the things they did had they been smaller regional banks? Then again WaMu was a regional bank, but it was the biggest player in the region. And would GM be better off breaking up into their own product lines? Not necessarily competing against each other and using combined resources when it makes sense, but allowing each car maker (Pontiac, Chevy, Buick, Saturn, GMC) go off and produce their own cars (but still using similar parts to be cost efficient). I don't know. |
11-24-2008, 11:07 PM | #2 (permalink) |
Human
Administrator
Location: Chicago
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It would promote more competition while also helping maintain economic equilibrium. I'm all for it, and I think our laws need to be updated to reflect these benefits.
It won't happen, but it'd be nice.
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Le temps détruit tout "Musicians are the carriers and communicators of spirit in the most immediate sense." - Kurt Elling |
11-24-2008, 11:29 PM | #4 (permalink) |
Addict
Location: Seattle
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it was mentioned on NPR, the idea that what massive banks remain are buying up smaller banks creating a near monopoly situation the economy is totally dependant on not to fail. funny how we need the banks to function but in effect we are slaves to them.
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when you believe in things that you don't understand, then you suffer. Superstition ain't the way. |
12-04-2008, 07:40 AM | #5 (permalink) |
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Splitting larger companies down into smaller companies would mean more failures, but none that would need to be bailed out as a systemic risk.
In my utopia, there'd be a hard limit to employees/revenue as a share of gdp (like 0.1%)/etc for companies and corporations before they'd need to be split into autonomous pieces. Less efficient, sure. Efficiency of company structure really shouldn't be a goal unto itself, though, or else we're headed to a single, global monopolist... These banks getting bigger will, over time, have more confidence. All history points toward there then being an opportunity to exploit up to and beyond the limits of reason. Then they'll be back in their current position, but an order of magnitude bigger, with more at stake should they be allowed to fail. Huge financial monoliths are the doom of this model for society.
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"I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- |
12-08-2008, 11:46 AM | #6 (permalink) | |
Junkie
Location: Ventura County
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Of the original Dow companies (12 in 1896) only one is still in business as originally chartered, General Electric. The Dow in 1979 compared to today, there are 5 companies out of 30 still in the Dow as originally chartered, Merck, 3M, GM, GE and IBM. Weak companies can get acquired, can go out of business, or can get smaller based on pure economic parameters without interference from the folks in Washington. It has happened in the past in a healthy manner and can happen now in a healthy manner. I think our current problem with letting companies fail has more to do with "special interests" in Washington more than it has to do with the health of our economy.
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"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." |
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12-08-2008, 12:34 PM | #7 (permalink) |
... a sort of licensed troubleshooter.
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Nothing's too big to fail. The issue is when the government steps in to bail them out. If we're going to be a capitalist system, then let's be capitalist. If we're going to have elements of socialism, then let's implement them correctly and not just spend trillions on horrible investments.
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12-08-2008, 01:55 PM | #8 (permalink) | |
Junkie
Location: Ventura County
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"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." |
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12-08-2008, 02:16 PM | #9 (permalink) | |
Location: Washington DC
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Food and drugs, other consumer products, insurance, utilities, health care, solid waste disposal...... are regulated much more than banks and auto manufacturing.
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"The perfect is the enemy of the good." ~ Voltaire |
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12-08-2008, 02:43 PM | #10 (permalink) | |
Nothing
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Companies do wrong when they become a systemic risk to good governance in failure.
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"I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- |
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12-08-2008, 03:40 PM | #11 (permalink) |
Super Moderator
Location: essex ma
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this libertarian thing would be debilitating entirely in a situation of crisis. if you couple that with arbitrary infotainment (automobile manufacturing is heavily regulated? on what planet?)....well, there's no need to go on.
to say the obvious, there is *no* strict separation between the spheres of economic, political and social activity when you get down to it--the political order under capitalism derives its legitimacy from the regular functioning of the economic, which in turn leans on the social---so economic failures that impact too heavily on the social world are in themselves political problems. given that, states have little choice but to intervene---and if they do not, that is in turn a political action--neoliberals, despite what they say, knew this full well, and if you think about, say, structural adjustment, constraining state action was a political calculation imposed by the north on the south for particular reasons of political expediency from the northern/imperial viewpoint. anyway, that a state more or less has to intervene when things pass a certain point is given--*how* they do it is not. the bush people have chosen to encourage concentration as a way to "deal with" this crisis. i see them as functionally boxed in to this option as a consequence of their seeming inability to think of the state as a viable actor in the economy and the endless series of ad hoc pseudo-measures. i think that anyone who is paying attention is just hoping that things hold more or less together until february...but it's not at all given that this will occur. the options obama will have to reverse the concentration-as-tactic moves that the bush people have allowed seems to me minimal--but changing the overall political frame that orients actions is entirely necessary and doable. this is why i am concerned by the number of centrists in obama's cabinet so far---i think an aggressive break with neoliberalism is a prerequisite for coherent action (both in this situation and in general)--i am not sure if the personnel is an indication of policy logic or if it is more an indication of a mode of governing that is neutral as to policy...we'll have to see.
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a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite |
12-09-2008, 09:35 AM | #13 (permalink) |
Location: Washington DC
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Having just posted in the latest gun control thread, it occurred to me that I should have included guns in the list of industries more heavily regulated than banks or auto manufacturers.
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"The perfect is the enemy of the good." ~ Voltaire |
12-09-2008, 02:50 PM | #14 (permalink) | |
Junkie
Location: Ontario, Canada
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In Canada, there are much fewer banks, more regulation, but no Canadian bank will fail. The concept is virtually unheard of here, while US banks fail constantly.
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Si vis pacem parabellum. |
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12-10-2008, 10:15 AM | #15 (permalink) | |||
Junkie
Location: Ventura County
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I could continue but those who get it, got it already and to those who don't it won't make a difference. -----Added 10/12/2008 at 01 : 17 : 08----- Quote:
-----Added 10/12/2008 at 01 : 23 : 40----- Quote:
It is like a person in federal prison. Everything they do is controlled, they are under guard (like being heavily regulated), but then you have a prisoner commit suicide. On the surface one could conclude that they were not controlled and under guard since they committed suicide. Kinda like Fannie and Freddie, they were controlled and under guard, but they still took suicidal actions. On the surface we could say they were not regulated, but the truth is they were. The problem was just like with the prisoner we did not account for and "regulate for every possibility for suicide. Live and learn. Analogy alert ended.
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"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." Last edited by aceventura3; 12-10-2008 at 10:57 AM.. Reason: Automerged Doublepost |
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12-10-2008, 10:49 AM | #16 (permalink) | |
Location: Washington DC
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I could continue but those get it, got it already and to those who don't it wont make a difference.
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"The perfect is the enemy of the good." ~ Voltaire Last edited by dc_dux; 12-10-2008 at 10:52 AM.. |
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12-10-2008, 10:55 AM | #17 (permalink) | |
Junkie
Location: Ventura County
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__________________
"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." |
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12-10-2008, 01:22 PM | #19 (permalink) | ||
Junkie
Location: Ventura County
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You may argue, oh that's nothing, just a blip. But I argue the blips add up, and clearly Washington was involved in directing some of Fannie Mae activities, even during the time you would argue regulation and oversight was getting lax.
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"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." |
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12-10-2008, 01:43 PM | #20 (permalink) | |
... a sort of licensed troubleshooter.
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12-10-2008, 01:44 PM | #21 (permalink) |
Junkie
Location: Ventura County
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If you say so.
__________________
"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." |
12-10-2008, 02:38 PM | #22 (permalink) |
... a sort of licensed troubleshooter.
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12-10-2008, 02:44 PM | #23 (permalink) | |
Junkie
Location: Ontario, Canada
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The US banking system allowed ridiculous risks to be taken with mortgages. Those risks are simply not allowed to be taken here due to various regulations (although because all large corporations invest abroad in a variety of paper backed assets, we suffered a smaller exposure to the problem in another way). Don't let capitalist or libertarian or whatever dogma interfere with reality. When it comes to safeguarding people's money, when it comes to making sure people - whether good or bad, well meaning or bad intentioned - keep other people's money safe, a bit of regulation lends a lot more protection. As to the deregulation (although it was not something I said specifically - I was comparing the banking habits of the two nations), others such as dc dux have already addressed this issue.
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Si vis pacem parabellum. Last edited by highthief; 12-10-2008 at 02:47 PM.. |
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12-10-2008, 03:10 PM | #24 (permalink) |
Super Moderator
Location: essex ma
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to argue that the deregulation of banking and mortgages--and the lack of even a central clearing house for derivatives trading, such that not only are there almost not regulations, but there isn't even a minimal transparency that would enable anyone--including a potential regulatory institution--to know what the fuck is going on within that trade---have no connection to the present crisis is like arguing that the world is flat because if you look straight ahead you don't see a curve.
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a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite |
12-11-2008, 09:25 AM | #25 (permalink) | ||||
Junkie
Location: Ventura County
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Also from the article: Quote:
However, my original point is that "regulators" and regulations may be at the root of many corporate problems. GM for example has an average labor cost about $30 an hour higher than foreign competition operating in the US. Some existing regulations make it impossible for GM to reduce those costs to match the competition. Even with a bailout, a car czar, or whatever, GM is not going to be competitive unless they get major concessions from labor. In addition they have to be able to close inefficient and obsolete plants, regulation makes this process excessively difficult as well. GM has been dieing a slow death for about 30 years, the bailout will prolong the process not prevent it. -----Added 11/12/2008 at 12 : 38 : 32----- Quote:
The Wall Street Journal Online - Interactive Graphics I don't know much about banking in Canada, but in the US there are large numbers of small locally chartered banks that always have a higher risk of failure than large national or international banks.
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"Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers." Last edited by aceventura3; 12-11-2008 at 09:38 AM.. Reason: Automerged Doublepost |
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big, broken, companies, fail |
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