Tuesday, September 23, 2008

Too big to fail

A seriously not thought out idea:

Maybe the SEC should condition mega-mergers on a condition...no bailouts. Then the shareholders could decide. I know, I know, shareholders don't really have a say...so don't invest in big companies or divest after the merger.

Won't help with companies that just grow huge on their own or "quasi-governmental" enties like Freddie and Fannie but would at least make directors and shareholders think twice before an Exxon/Mobil type merger.

I'm just sick that we are on the verge of this...$700B, and we all know that really means: >$1.5T.

I'm not afraid to say markets fail. They do. Business will aspire to monopoly because once attained it no longer has to compete. Markets succeed when businesses compete. When businesses have to compete that's when markets succeed.

Freddie and Fannie didn't have to compete. I have no idea about AIG. Let the brokerages burn.


Stephanie said...

I'm with you on all points. For sure $700B means >$1.5T. I still haven't seen a good prediction of what a failure would mean to average taxpayer. Sure, my mutual funds probably own something that's going to tank. How much would your standard index fund lose? How much would house prices fall? I'm willing to lose wealth to leave the the markets alone, so that gamblers pay the consequences.

Scooter said...

I haven't seen any good predictions either. I don't think there are any out there. I don't think anybody knows and I don't believe anybody who thinks they do.

I wish I had time to live this day in and day out for the next few weeks.