im not sure of all the particulars, so take my opinion with a grain of salt.

agree with BO that we shouldnt have corporations that are "too big to fail". because it seems that they then abuse that status. why not make high risk / high reward plays with your clients' money when the govt is guaranteeing you that its a no risk / high reward play?

yeah, i read the economist, but like i want one on theory, not just on stuff thats happening today

if you are too big to fail you should be broken up into constituent comapies like standard oil and AT&T were. It's funny if you look at the corporate history of those companies they've each almost practically reassembled themselves through mergers. Exxonmobile for instance is made up of like a dozen Of the companies standard oil was broken up into.

Back then they mostly broke companies up across state or regional lines. But yes I do think we need some trust busting today even in those companies you named rob. Being too big to fail is a failure of the free market to police itself - according to Keynes this macroscopic responsibility falls on the government of a prudent nation to correct. Ergo when the free market can't do it's job (provide reasonably priced goods of reasonable quality) the government needs to step in. It's not communism - it's been historical precedent for well over 2 centuries.

The amount of control a company or cartel has over the markets they operate in should be a concern. Mostly the companies the operate and profit off of the financial markets need to be very closely monitored as they have a significant influence across a wide variety of sectors. Readily available liquidity is a great tool to have in the global economy and ensuring that these markets operate efficiently and honestly is key.

In the old days a single person could walk into the exchange and corner the market of a single commodity, now you have firms capable of shorting on an entire countries economy causing a global drop. The fact that so much of the world operates because of the ability for wanton speculation should be a terrifying idea to everyone.

BO and Monte: "Too big to fail" is an invention. It simply doesn't exist. We have had this discussion numerous times.

The mistake in reasoning is in accepting the concept of "too big to fail" where is this concept proven? It is only keynesian's that claim companies are "too big to fail". And then use this concept to pressure the public into accepting ridiculous measures to solve it.

Capitalism - creative destruction = crony capitalism.

That is what the Keynesians created. Companies must be allowed to fail because of their own bad actions. If this essential mechanism of capitalism isn't manipulated we would not have these problems.

Monte: Please look deep down in your memory. Where is the root of "too big to fail"? It is always some economist that is asserting it as a truth with no backup of fact. Science requires evidence; where is this evidence?

And while you are contemplating the above; please also consider the following.

Look at how "too big to fail" has worked in practice.

GM was "too big to fail". Does anyone actually believe that?

AIG was "too big to fail". What? Explain to me why?

Also explain to me why 1/3rd of fed bailout loans went to foreign banks?

Cmon people; let's wake up and take a deeper look at this shit sandwich.

Also 88% of NY Fed Bailouts went to foreign banks.

So basically if these foreign banks were "too big to fail" how are we supposed to even stop it? OMG its a fictional crisis ("too big to fail") and even foreign banks are capable of being that big! Meanwhile; these banks / hedge funds have a revolving door in politics. This is crony capitalism.

Just for you deadcode:
http://youtu.be/qOP2V_np2c0

I love videos in that style; I find the animation of the whiteboard to be easy to follow.

However I totally disagree with it's premise; which is that capitalism doesn't work.

Basically it is a really well produced advertorial for Marxism; but it doesn't really make any new cases; just reiterates the old tired discussion.