3 ms·

"too big to fail" means that a business has friends in the legislature and can keep on acting like the local affluent drunk teenager who somehow manages to cras

• ch4s3 6y ago
  That's not what people meant in 2008 when the phrase "too big to fail" came into the lexicon. The phrase meant that there was systemic risk. You're moving the goal posts to mean "big companies are behaving badly," which is different.
  • swiley 6y ago
    That's certainly how it was sold but I think even then it meant what I said.
    • ch4s3 6y ago
      I really didn't though. There was real fear at the time that if auto makers went under it would ripple through their supply chains and gut the economies of numerous states, then leading to a cascading series of state and local budgetary crises. How correct that assessment was is up for debate. The fear with banking was that the industry had become so consolidated and interleaved that a failure of one mega-bank would bring down the whole financial system and cause a liquidity crisis that would tank any industry that relied on credit for ongoing operations, which is most industries. None of this was about companies' behavior it was about how they had become so large that their failure would destroy huge segments of the real economy. Arguably though, the bailouts are a form of moral hazard that make more companies too big to fail. Its commentary on the system.