It has been pointed out that if you lose a billion dollars you are a businessman down on his luck and you never miss a meal, if you lose your job you are a working stiff and you go hungry. But if you lose enough billions you become “too big to fail” and the government wants to step in and save you because your failure could take a lot of innocents with you. The free-wheeling speculation that creates these bubbles is not part of Adam Smith’s invisible fist, it is more of a socially acceptable form of big stakes casinos.
Let’s talk about markets, speculation and what we think of firms that are able to make themselves “too big to fail”. We may (gasp) decide that if they are too big to fail then they are too big to make unfettered decisions. And it sounds like some of those financial instruments they were investing are just multi-billion dollar versions of “the fine print”. NPR has been claiming that the backrooms are filled with rocket scientists creating these monstronsities, and we, luckily, have a former rocket scientist in our group who will be able to shrug his shoulders in true military fassion over these concept.
We’ll leverage our pints and hedge our bets as we take on the lighter side of the depression (oops) of 2009.
Next, at Politics and a Pint.
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