Would Einstein find it insane that the governing elite would encourage the 4 biggest banks, that were the main culprits in creating a worldwide financial collapse, to actually get bigger? The largest banks in the U.S. now control 72% of all the deposits in the country versus 68.5% in 2008. The Too Big To Fail are now Too Bigger To Fail. Rather than liquidating the bad debts, breaking up the insolvent banks, selling off the good assets to well run banks, firing the executives, and wiping out the shareholders & bondholders foolish enough to invest in these badly run casinos, the powers that be chose to protect their fellow .01% brethren and throw the 99% under the bus. The Fed’s latest actions in cooperating with foreign central banks to undertake liquidity swaps of dollars for foreign currencies is another reason why Congress needs enhanced power to oversee and audit the Fed.
It is a fool’s fantasy to think we can live in a globally connected economy and never have a situation arise where the government prudently steps in to prevent a failure that might lead to catastrophic ramifications. In most cases, I believe it would be much better to let bailed-out companies fail when they have mismanaged themselves, rather than waste taxpayer money propping up greedy idiots who are trying to salvage their own bonuses.
The wiser course would be to penalize the CEO or board of directors who drove the company to the brink of failure. The most obvious punishment would be the elimination of any “golden parachutes” or bonuses for the executive and seizure of all company-derived assets, including any attempts to hide company assets in the spouse’s name. When C-level executives come to the realization that managing a company is not a game and that there are serious consequences for their actions, we will see fewer instances of requests for bailouts.
The system can recover from bankruptcies, as it has done throughout history. Would the world really have come to an end had AIG gone into bankruptcy or Goldman Sachs been forced to liquidate and close its doors?
Bankruptcy cleans out the system. What’s wrong with that? South Korea went through this in the late 1990s. They didn’t have anyone to bail them out, and they had to go through the pain. Sweden did it in the early 1990s. Mexico did it. Russia did it. The list goes on and on. Competent people take over the assets from incompetent people and rebuild from a solid base. Business has always been survival of the fittest and Darwinism at its best.
Isn’t this what capitalism is all about?