The 6 Pack Economist

If you are expecting something about throwing our money down the blackhole of failed investment banks and such I am sure there are plenty of other posts like that.  This one is different as I am going into the “too big to fail” theory and how it is similiar to the physics of blackholes.  The short version of this is that when companies or organizations get too big the sheer mass of them failing pulls so many other companies with them that the standard rule of markets breakdown.

In physics blackholes start breaking traditional rules of physics.  Rational explantions of what goes on in the world simply do not apply (yes I know about how they work but try explaining it to a regular non-phd holding person and all they here “weird stuff happens).  This happens because they become some ackin to there own self-fulling prophecy.  Each piece of mass they pull in allows them to pull in more mass.  Something similiar has happened in our economy except instead of physics breaking down, the free market breaks down.

 Under normal cercumstances a company that has failed as miserably as those in todays market would just be allowed go into bankruptcy and either recover or close it’s doors.  In smaller companies this might cause a few other companies to fail that normally would not but nothing too severe (unless you are the one who lost their job).  What made this different is that many of these investment banks have swallowed each other up over the years that these massive institutions would essentially cause an economic blackhole by their collapse.  They would suck all those nearby into their collapsing mass.  The resulting devastation would end much of the economic progress people have made through their life. 

Do I like it. No.  I freaking hate that these miserable failures have to be saved.  I just wished that these damn mergers that the FCC authorized over the past 30 odd years may have been better scrutinized.  That way a bunch of little failures could occur.  We could take our medicine and recognize that that way of doing business does not work.  Those CEO’s and upper excutives can face financial ruin for dumb decisions and other savier business leaders could prosper.  Instead we reward failure.