Too Big to Fail: Why That Concept is a Failure
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Much of the current financial industry is in upheaval. There are banks deemed too big to fail, while major companies such as GM and Chrysler, are deemed able to fail, if the White House does not agree with their direction.
There are a number of aspects of failure that aid in eventual success, with a wide range of examples being sized just right to fail. Being too big to fail is a matter of perspective and direction, specifically with the arbitrary assignments of importance that exist in todays society. Lets examine the largest bank in the world, and then get larger from there and analyze what it means to be too big to fail.
Citigroup is the largest bank in the world, with a market cap of over $300 billion, and controlling over $2 trillion dollar in total assets.
If you work or are a vendor for Citigroup or a subsidiary, you probably have valid concerns about your job and a portion of your 401(k) if there was a failure in the organization. Most employees in Citigroup probably had little to do with the creation of some of the financial derivatives that are leading the organization toward failure. In fact most employees have attempted to make the company more successful through traditional routes of working hard and gaining customers.
People outside of Citigroup see a massive business, with plenty of assets that are ready for the taking. Private equity groups, venture capitalists, and entrepreneurs would love to get a hold of a few of the productive assets within Citi. The malinvestment within the organization, and many like it, are unable to fail as a result of the governments intervention, allowing the employees to keep their jobs, but potentially reducing options for additional employment as a result of the number of other companies that would be created from the liquidation and separation of the productive and unproductive assets.
Citigroup is still too big to fail? How about something a bit larger?
Try the Roman Empire on for size; the empire was at one point the greatest force in known civilization. This empire at its height controlled over 20% of the worlds population. The empire was responsible for most of the ideal of western government, philosophy, art, currency, and military advancements. The citizens of the Roman Empire had more opportunities than most, but again depending on your perspective the demise of the Roman Empire was met with either exhilaration or disappointment.
Clearly those in charge of the Roman Empire had much more to lose than those that supported the vast empire. The incredible Roman army, documented for much of the success of the empire, probably enjoyed the opportunity to move back to their land and see their families again, after long tours, creating the empire.
Many of the conquered countries of the Roman Empire, most likely had a different perspective of the collapse of the empire. There ability to begin to operate autonomously without being persecuted by the Roman Empire, surely was met with a breath of fresh air.
So, the failure of the Roman Empire was massive for the hierarchy of the empire, but probably less so for the soldiers, the conquered countries, and the oppressed, which were spread well across the empire.
Was the Roman Empire too big to fail? Is Citi too big to fail? It always depends on perspective, the important question to ask, is why would something that is ready to fail be forcefully propped up? Surely there is a money trail heading to some of the key politicians making the call, and clearly like the Roman Empire those elitists would be more impacted by the failure of any large organization much more than the bulk of taxpayers bearing the load. Failures are simply pathways to success; it just depends on your direction and perspective.
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We in America do not have a government by the majority. We have a government by the majority who participate.