Diary

Too Big Too Fail Is Too Big To Fix - A Solution To The Problem

Decades of bad decisions seem to be coming together in an incredible, perfect storm of trouble.  Now we are bailing out large companies left and right because they are “Too big to fail.”  If you or I have a small to medium business going under, tough luck.  Looking at what is happening, throwing money at the problem is not fixing anything.  We are just dragging out the death of ineffective companies.  The solution to me is pretty obvious.  We need to remember who the government is here to serve.  They do not serve corporations, but “We the people.”   If we borrow a page from Teddy Roosevelt we can save the business for the people.  Here is my idea.  Maybe you will love it, maybe you will hate it.  The key here is that it is an idea.  Washington has no ideas on how to fix anything right now, past throwing our money around and hoping the problems go away.

 

Let GM die.  Obviously it is too big to manage.  The bureaucracy and bad decisions of the past have just gotten too big.  We can not save all the people who worked for them, but we can save most.  Borrow from the idea of the old trust busters ( TR was not fan of the big trusts of his day, thus the reference to this great Republican in the start ) and break them up.  We will not give money to GM, but we can give money to Cadillac, Chevy, Saturn, Buick and GMC.  Maybe each company becomes stand alone.  Maybe you break GM into 2 or three smaller companies with 2 or 3 brands.  Give money to save these new smaller companies, then let them go.  If they recover and grow, great.  If they fail, the smaller entities may be of a size to be absorbed by another company or bought out by investors with better ideas.  Even if they straight out die, the impact will be lessened.

 

Let Citi die.  No bank should be able to destroy the whole country.  Break them up into 4 to 6 smaller regional banks and bail them out.   Has anybody noticed that we are not seeing near as many problems from smaller banks?  There is likely a reason for that.  Instead of making us bail out a failed business model, make them change their model and bail that out.  This idea follows for any other failing banks.

 

Let AIG die, fast.  They are more complex, and I do not pretend to totally understand this massive corporate behemoth.  I guess I should not feel bad, the people running it do not seem to understand the business any better than I do.  Maybe it should be regional like Citi.  Maybe it should be broken up by service line.  It is obvious that all they are doing now is running the business the same bad way and asking for more money over and over.

 

If a company does not ask for help, leave them alone.  Successful companies do not need salary caps or other government controls.  If the failing companies refuse to break up?  Let them die.  Let a group of investors step in who are willing to do break the company up, and give them the money.  Trust me, faced with breaking up or unemployment they will break up. 

 

This way of doing things is to save the jobs of the people who work there.  That is what this is about.  Would it work, who knows.  What our government is doing right now certainly is not.  We have to try to come up with new and possibly radical solutions for such large new and radical problems.

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