4 ms·

I really hate the "too big to fail" meme and I strongly agree with Bernie in that if you are too big to fail you are too big to exist. That should be the prior

by tyfon 9y ago

I really hate the "too big to fail" meme and I strongly agree with Bernie in that if you are too big to fail you are too big to exist. That should be the priority.

65827 9y ago
Why is every arrangement of characters now a "meme". That word has moved beyond devoid of meaning, at this point it's like a black hole of nothingness of a word.
- TrickyRick 9y ago
  > A meme (/ˈmiːm/ MEEM) is an idea, behavior, or style that spreads from person to person within a culture. Seems like it's fitting here, does it not? Certain banks being "too big to fail" is an idea passed among persons within our culture.
  - sharemywin 9y ago
    kind of like the idea of a meme (/ˈmiːm/ MEEM) is a meme (/ˈmiːm/ MEEM).
TrickyRick 9y ago
Agreed, it seems like the software approach as well. You wouldn't want a class or a piece of code to be "too big" to fail, you'd refactor it into smaller pieces which can be overviewed more easily.
- CaptSpify 9y ago
  It's really a basic engineering principle. Smaller and more distributed systems are more reliable.
  - collyw 9y ago
    This sounds like the microkernel / monolith debate. Except monoliths kind of won.
    - CaptSpify 9y ago
      It depends on what you want to optimize for. micro is good for some things, mono is good for other things. Neither is inherently "better", it just depends on your goal
dalbasal 9y ago
I don't know what Bernie's specific plans were/are but it's not unusual. At least, at first blush, this is a lot of people's reactions. Too-big-to-fail = danger = make it smaller. Realisitically, this has not been the solution implmented (in the EU & US, at least). In the EU, it is even more crucial as the "solutions" to this problem are applied to state finances as well as financial institutions. In terms of policies, there are two competing approaches: (1) Reduce the size of "too-big-to-fail" institutions. (2) Regulate them more heavily (or some other strategy) so that they will not fail. In the EU, this is being applied to states, not just financial institutions. Rules that (supposedly) reduce catastrophic risk. Almost all seripous policy proposals are in the no. 2 category. Tighten regulation, reduce the risk of failure. Tighter regulation lends to stronger incumbents and larger average company size so by doing 2, you are probably doing the opposite of 1. As I said, I don't know what Bernie's proposal is or how mature it is as a policy (as opposed to a politician statement). It would be notable if a left wing politician propsed loosening bank regulations, though definitely not impossible or unreasonable.
- ktRolster 9y ago
  Paul Volcker's solution was that any time a bank is so big that we need to bail it out to avoid systemic problems, then the bank should be broken up. We can't always see all the problems in advance, but we can break them up in the aftermath.
awkwarddaturtle 9y ago
> I really hate the "too big to fail" meme and I strongly agree with Bernie in that if you are too big to fail you are too big to exist. That seems like the most reasonable response. And yet, since the great recession, our policy has been "make 'too big to fail' even bigger". The problem is that the banks have become too powerful for anyone to challenge. A Teddy Roosevelt type of political leader can't exist today.
- adventured 9y ago
  Corporate entities were radically more powerful in Teddy Roosevelt's day, far beyond what they are today. They were almost entirely unchained in regards to economic power, whereas today there is hyper regulation (tens of thousands of pages of it, including direct Fed control over the banking system). Standard Oil was as powerful as the US Government in that era, as were the railroads. JP Morgan was far more powerful than the US Treasury. Cornelius Vanderbilt - pre Roosevelt - all by himself had greater financial capability at his peak than the US Government at the time. The difference, is back then there was wide-spread and growing fear of the combinations and would-be monopolies. Today, Americans are relatively unconcerned by Microsoft (desktop), Google (search, android), Walmart & Amazon (retail), Intel (microprocessors), Facebook (social), Cisco, Boeing, etc.
  - pyroinferno 9y ago
    Why leave it at American companies? The Dutch East India Company was far more powerful and bigger than any company seen today.
    - bb611 9y ago
      Beyond that, it was more powerful than many (maybe most) modern governments. It was an international power unto itself.
- tdb7893 9y ago
  Here is an smbc comic making fun of this phenomenon. http://www.smbc-comics.com/index.php?id=3794 http://www.smbc-comics.com/index.php?id=3794

by tyfon 9y ago

I really hate the "too big to fail" meme and I strongly agree with Bernie in that if you are too big to fail you are too big to exist. That should be the priority.

65827 9y ago

Why is every arrangement of characters now a "meme". That word has moved beyond devoid of meaning, at this point it's like a black hole of nothingness of a word.

TrickyRick 9y ago
> A meme (/ˈmiːm/ MEEM) is an idea, behavior, or style that spreads from person to person within a culture. Seems like it's fitting here, does it not? Certain banks being "too big to fail" is an idea passed among persons within our culture.
- sharemywin 9y ago
  kind of like the idea of a meme (/ˈmiːm/ MEEM) is a meme (/ˈmiːm/ MEEM).

TrickyRick 9y ago

Agreed, it seems like the software approach as well. You wouldn't want a class or a piece of code to be "too big" to fail, you'd refactor it into smaller pieces which can be overviewed more easily.

CaptSpify 9y ago
It's really a basic engineering principle. Smaller and more distributed systems are more reliable.
- collyw 9y ago
  This sounds like the microkernel / monolith debate. Except monoliths kind of won.
  - CaptSpify 9y ago
    It depends on what you want to optimize for. micro is good for some things, mono is good for other things. Neither is inherently "better", it just depends on your goal

dalbasal 9y ago

I don't know what Bernie's specific plans were/are but it's not unusual. At least, at first blush, this is a lot of people's reactions. Too-big-to-fail = danger = make it smaller. Realisitically, this has not been the solution implmented (in the EU & US, at least). In the EU, it is even more crucial as the "solutions" to this problem are applied to state finances as well as financial institutions. In terms of policies, there are two competing approaches: (1) Reduce the size of "too-big-to-fail" institutions. (2) Regulate them more heavily (or some other strategy) so that they will not fail. In the EU, this is being applied to states, not just financial institutions. Rules that (supposedly) reduce catastrophic risk. Almost all seripous policy proposals are in the no. 2 category. Tighten regulation, reduce the risk of failure. Tighter regulation lends to stronger incumbents and larger average company size so by doing 2, you are probably doing the opposite of 1. As I said, I don't know what Bernie's proposal is or how mature it is as a policy (as opposed to a politician statement). It would be notable if a left wing politician propsed loosening bank regulations, though definitely not impossible or unreasonable.

ktRolster 9y ago
Paul Volcker's solution was that any time a bank is so big that we need to bail it out to avoid systemic problems, then the bank should be broken up. We can't always see all the problems in advance, but we can break them up in the aftermath.

awkwarddaturtle 9y ago

> I really hate the "too big to fail" meme and I strongly agree with Bernie in that if you are too big to fail you are too big to exist. That seems like the most reasonable response. And yet, since the great recession, our policy has been "make 'too big to fail' even bigger". The problem is that the banks have become too powerful for anyone to challenge. A Teddy Roosevelt type of political leader can't exist today.

adventured 9y ago
Corporate entities were radically more powerful in Teddy Roosevelt's day, far beyond what they are today. They were almost entirely unchained in regards to economic power, whereas today there is hyper regulation (tens of thousands of pages of it, including direct Fed control over the banking system). Standard Oil was as powerful as the US Government in that era, as were the railroads. JP Morgan was far more powerful than the US Treasury. Cornelius Vanderbilt - pre Roosevelt - all by himself had greater financial capability at his peak than the US Government at the time. The difference, is back then there was wide-spread and growing fear of the combinations and would-be monopolies. Today, Americans are relatively unconcerned by Microsoft (desktop), Google (search, android), Walmart & Amazon (retail), Intel (microprocessors), Facebook (social), Cisco, Boeing, etc.
- pyroinferno 9y ago
  Why leave it at American companies? The Dutch East India Company was far more powerful and bigger than any company seen today.
  - bb611 9y ago
    Beyond that, it was more powerful than many (maybe most) modern governments. It was an international power unto itself.
tdb7893 9y ago
Here is an smbc comic making fun of this phenomenon. http://www.smbc-comics.com/index.php?id=3794 http://www.smbc-comics.com/index.php?id=3794