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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (38426)	11/11/2009 12:23:39 PM
From: TimF	Read Replies (2) \| Respond to of 71588

We can either succumb to the forces that are shifting markets toward greater government back-stopping and socialization. Or we can create a structure in which no institution is too big to fail, and a financial system that is supervised effectively by a modernized central bank. Or we could drop or nearly drop the idea of too big to fail, and let them fail, at least most of the time. Might cause some pain in the short term to the rest of the economy (and obviously would cause pain to the shareholders, employees, and other people associated with the company), which is why politicians would be reluctant to do this, but it would remove the distortions and moral hazard inherent in "too big to fail" status, and it would help free up the resources used by the company to be used for more profitable purposes.