I am giving you fair warning, if you don't want to be offended go someplace else. Economic pornography is on the way. You have been warned!
Too big to fail? California representative, John Campbell thinks that "Too Big to Fail" (TBTF) exists and he wants to do something about with the help of the Federal Reserve. Geez, talk about swallowing more of the poison that made you sick....
If you believe in the notion that something (bank, industry, company ect) is "too big to fail"....then you are an enemy to freedom. I make no apology for it, somebody had to tell you. Kinda like somebody had to tell you there is no Santa Claus....well, there still is the federal government, hmm...go figure.
You have been fooled by the statist politicians and their cronies in the world of commerce. You have been duped into believing that profit should be privatized and risk belongs the taxpayer.
Failure is the inherent risk in any endeavor. The risk belongs to the people who take it, likewise the reward. Specifically, in the world of banking, the risks associated with the banks activities belong to the depositors/borrowers and the shareholders. If the bank fails, it fails, end of story.
Those who believe in the concept of TBTF will quickly respond, but if this bank fails, then such and such will happen. Well, it might, but of course, we don't know what will happen. Besides, what if such and such does happen, so what?
Fear is the only thing that TBTF-ers have to offer. Fear that the entire world economic system will crumple if a bank that is declared TBTF actually fails. Fear that there will be food riots and political unrest heretofore never seen. Fear that life will never be the same.
Without a doubt, if JP Morgan or Chase fail there will be fallout. Just as there was when Lehman Brothers failed. But did the world end when Lehman failed? No. Why not? Because the fear monger TBTF-ers passed TARP legislation? No. Because the federal government came to the rescue of the auto industry? No doubt the legislation that insulated the potential loss and assigned it to the taxpayer built confidence in the system, but why should this have been done in the first place? Maybe because the system has become too dependent on government?
The world did not, nor would it, come to an end in the great metal down of 2009. Markets work. Assets are bought and sold on a discounted basis, insurance steps in and covers items previously insured and the world just keeps on spinning. Losses are realized. Deal with it. Profits are made, deal with it some more.
So, why do we need "Too Big to Fail" legislation. We don't, but the business community wants it. It is a said state of affairs when business spends more time lobbying government for profit than it does spending time convincing consumers to buy their product.
Which would you rather have as a business person: A guaranteed safety net backed by the taxing power of the federal government or ....... you fill in the blank. I'll betcha it is always the former and rarely the latter.
Big business and big government are not freedom's friend when they act in concert to promote their respective interest. One hand feeds the other and we ending paying the bill. We have no one to blame but ourselves.
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