I Do Not Think That Word Means What You Think It Means
I am sympathetic to the OWS hatred for bailouts and crony capitalism, but struggle to understand how they intend to fix the consequences of the exercise of government power in the private world with yet more exercise of government power in the private world.
Apropos of very little, I found this bit from Matt Taibi funny (emphasis added)
1. Break up the monopolies. The so-called "Too Big to Fail" financial companies – now sometimes called by the more accurate term "Systemically Dangerous Institutions" – are a direct threat to national security. They are above the law and above market consequence, making them more dangerous and unaccountable than a thousand mafias combined. There are about 20 such firms in America, and they need to be dismantled
I am pretty sure that, by definition, a single industry cannot have 20 monopolies.
Though I share the same concern, my solution is to just let them fail. Right now, the cost of capital for these large companies is lower than the cost of capital for smaller companies because, even though many of them have far worse balance sheets than smaller banks, investors feel they have too big to fail protection. Let a few fail and have the cost of capital shoot up for larger companies and you can be pretty damn sure they market itself will break up these companies.
In some ways it reminds me of the market premium given in the 1960's to multi-industry conglomerates like ITT. When the capital markets made their cost of capital low, everyone tried to copy their conglomerate strategies. When these strategies started failing and companies like RJ Reynolds found their diversification into shipping and shower curtains was a business disaster, capital dried up for these Frankenstein monsters and most of them were broken up. All without a hint of government intervention, either to save them or kill them.
Its telling that no one on the Left or with OWS who gives this advice for financial institutions takes their own advice with, say, auto companies. GM should have failed and likely been broken up as well.
