Wednesday, April 1, 2009

I've Got a Hotel on AIG, and 4 Houses on GM

Companies that are too big to fail are, when they are failing, too big. The profound ignorance of GM and the profound arrogance of AIG are due in large part to being too large to support themselves. It is clear that the organization's leaders recognize that both companies are unlikely to profit without serious changes.

So why can those changes not be cutting them into new, separate companies? What is the harm? I would think that by separating the companies the increase in competition will drive them all to be more technologically savvy, and while some of these small companies will fail, they can be re-taken over by the ones that succeed.

The the car companies in particular, it is clearly their fault that they are failing. And letting them die is still not really a viable option. But continually funding them is obviously a problem as well - not because they piss money like a drunken frat boy, but also because it is unfair to the car companies that are succeeding. They are giving 48 billion to GM to help it succeed, but if there are car companies that are doing better, they are not going to be getting the same funding.

Quick example: If Ford starts to be really profitable, they will not get a bailout, but GM still will, giving GM an unfair financial advantage to make inferior cars.

At least breaking up these companies should at least stir the pot, and certainly cannot bleed these companies any drier. Plus they would start to go out of business at different paces, meaning that 5 million people are not going to suddenly be without a job.

14 comments:

Kristin said...

Librocrat, (love the title) I could not have written a more concise post. There has got to be someking of anti-trust laws that are being violated because of the sheer mass of the company. Look at what Apple did to Microsoft. They have forced Microsoft to get back into the game of invention.

Oh and I am still hanging toying with the idea of shutting my blog down and become just a commentator.

Librocrat said...

Any reason to shut your blog down? They are hard to update regularly, but long ago I decided I would not bother thinking too hard about my posts, and instead I just write about whatever I can think of when I have some free time. It's not like I make any money with this =).

Kristin said...

Librocrat no real reason other than like you stated it was becoming a chore. I will get back into the swing of things.

Librocrat said...

For me, it helped when I stopped having regular readers =). Before I was really into the idea of getting a popular blog, so I commented everywhere, wrote long, detailed posts, etc. Somewhere along the line that died down, and the pressure went away. I do wish I updated more often, but whatever.

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