Who is Too Big To Fail?

For the past few months, we have been hearing debates about whether Bear Stearns, AIG, Lehmann Brothers, Chrysler, Ford, and GM are “too big to fail”, the assumption being that, were they to fold, they would take America down with them.

The question is, how does an influx of taxpayer money prevent failing? Isn’t the root cause of the current failures to be found with management, both on the financial side as well as the business planning side? How will the new cash from Joe taxpayer be spent differently from all the other money that has already been blown?

The hard truth is, that no business is too big to fail, to the extent that taxpayers should bail them out. Once we take this approach, we have chosen the inefficient and beauracratic road of the USSR and other communist countries, where the government basically is a giant conglomerate of failing businesses, propped up by outlandish taxes.

America is too big to fail, and in order to keep it alive, it must be quarantined from any mismanaged business. Other businesses will always rise on the ruins of today’s bankrupcies, but if we shy away from confronting the consequences of our actions, we will just be inviting a catastrophic day of reckoning at a future date.

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