Absolutely they should have been allowed to fail. There is no such thing as too big to fail.

My parents' GM bonds were allowed to fail ($225 in bankruptcy proceedings + a threatening letter for $100000 in bonds). If that happens, then GM's employees should have gotten no better a deal than that. Bankruptcy law says that preferred bondholders like my parents get the first out of the bankruptcy proceedings, except Obama violated not only that law, but my parents as well.

It is not about allowing it to fail. It is about preventing them from failing, by initiating the threats of force and violating individual rights at a massive scale.
Bailing out failure this way leads, and did lead, to increased failures down the road.

Yes. Yes.

Yes. Taking risk comes with reaping just reward. I should know, my business succeeded for 5 years and then failed.

This is a false choice. If they had "failed" and allowed to go bankrupt, the assets would have been purchased by another entity which would have used same to re-initiate the activity. Thus, "failure" would merely be a change of ownership.

Yes, this is how business is supposed to work. If you are failing, you figure out what is wrong and change it, not sit on your rear and wait for the government to bail out your poor process.

Yep. If they have bad management and make poor decisions (look at one of the other carmakers decades ago - Studebaker - that died of mismanagement) they should close their doors and let someone else reboot in their place - or not.

Sure, if I was an idiot CEO and ran a company that either made and/or engineered a notably poor product, or made supremely bad management decisions (or worse, allowed others to make them for me) or a financial company that engaged in practices that were known to both sink us into the morass of insolvency or cheat our customers so blatantly (while singing them a sweet sweet song of advertising schlock) then I'd also be the dishonest looter type that would want a sugar daddy to come in, slap my hand as if I were 3 years old, and say "Here you are, sweetie, daddy Biggov (Russian? Nyet!) and Auntie Mae will make it all right, we'll let you have a mulligan" and pour undeserved money glommed and stolen from the American Taxpayer...

Pligging Disgusting behavior, both by industry (as if the industrialists were Wesley Mouch and Orrin Boyle) and the power seeking government looking to own our Industries a'la the USSR and, for the most part, China.

We're not talking small business loans and the like - we're talking about using *our* treasure, talent, and time to support s#!t workmanship and mooch-based thievery.

Let them crash and burn. Maybe the entire "system" will come back a bit more honest, a bit more resilient, and a lot less dependent.

Moral Consequence! The problem with chrony capitalism is it takes failure out of the process and allows mediocre to rise to the top.

Had AIG, GM, and Goldman-Sacks been allowed to fail their assets would have been sold at market price to the second tier players in their field. Those successful 2nd tier companies would have brought the methods and systems to the marketplace that made them successful. With a wink and a nod the chronies bring us the same failed systems they rose to power with. In this case, it makes certain the possibility of similar failure in the future. Competition always refines. Sometimes refining requires creative destruction.

A pretense of economic policy covering a political philosophy that sanctions theft for the benefit of the politically connected.

Anytime that irresponsibility isn't punished with natural consequences, responsibility is punished.

Yes, in the case of GM, GM, the shareholders, bond holders, and the customers would have been better off with a regular bankruptcy.

Yes. ALL businesses should be allowed to grow or die according to their policy decisions and how well they fulfill their customers' expectations in the market.

Think about WHY these companies failed in the first place. It was because the government took upon itself liability that should have fallen to the business. With that kind of safety net, there was no threat of bankruptcy to check the managerial decisions to purchase bad loans en mass.

I blame government for causing the problem in the first place. They create the problem first by deciding they need to regulate industry and micro-manage it, but we have a long litany of things the government has screwed up when it has tried them because they have very little impetus to succeed and zero risk if they fail.

A true free market is already rigged to fix itself. It does not need a Bush or an Obama to throw money at it. Government needs to get out of the way and only worry about fixing itself.

http://www.fee.org/the_freeman/detail/th...

Government bailouts are the death knell of Free Enterprise. When select groups, that favor any administration, are withheld from the fallout( UAW etc) now Capitalism is the victim. I've been with Ford dealerships since 1974 and am proud of the way a family controlled company handled this last crisis. Many of you have pointed out that if they had gone down, someone else, with a better business plan would have filled the gap. You are correct. There would be some pain, but it would let the next company be wary of bad decisions, for they would know that it's "do or die". The situation is similar to the illegal alien problem. As long as they get a "bailout" they will keep coming. Who is John Galt? We are John Galt! See you all on Sept 12!

I think it would have done wonders for the competitive construction of automobiles in the US for the biggies to have failed. It would create an ecological vacuum and released a lot of business-forming-techies (kinda like tech 'viruses') who would design better cars 'in their garage' (or in small startup businesses); this is where innovation takes place.

Jan

The knee jerk reaction is "Yes, in a second".
That's good - that's the ethical response.

The realistic answer is "No, in a few months".

The government's role should be slow parachute to auctions, redistribution to the those willing to buy the assets, particularly small business.

Let them fail - carefully. There will always be uses for the assets unless it is a failed and obsolete industry.

During the advent of the automobile industry violent arguments ensued over an industry that was failing and loads of public money was spent to avoid having that industry fail and a collection of other industries that depended on that one industry.

Wagon making.

Folks, let it fail - gently.

Without failure, there can be no success.

It's for 'the greater good.'
(As sung by Oprahma and the Socialists.)

I would have allowed them to fail. Failure is a good thing. If you never failed, you're not attempting anything difficult. People learn from failure. All those investors, employees, vendors, and customers would have come away strong. And if they think they wouldn't, they should have structured things less risky.

I don't mean to sound harsh. We're not talking about someone dying. This is a business closing. Businesses come and businesses go in a cycle of creative destruction.

Politicians and bankers are way too full of themselves about how important the finance industry as it stands today is. We need a way to allocate capital, but if one institution fails, new ones pop up.

YES, it is called market clearing. Some lose, some win, but the real loss isn't passed on to the Tribute Slave. Why ? Because it is unethical for speculators to pass their bad decisions to the backs of TRIBUTE SLAVES!!!

As I recall back when being "Too Big To Fail" was en vogue, what they were really saying was they were "Too Big To be Allowed To Fail" for the betterment of the economy. Sometimes I wish they'd have pushed the lever and let them circle the bowl.

Of course, let them fail. Why should we taxpayers pay for there inability to stay solvent? Actually, it's small businesses that employ most people and contribute the most to society. If the economics in this world weren't so screwed up, it would be better to say that a business was too small to fail. But as the lady with the restaurant found out, it's the squeaky wheel that gets the oil, even though the silent wheels keep the cart running.

yes. no enterprise is too big to fail. consider the
United States. we -- or they, more properly --
are proving this right now. that an aig or a gm
could fail is a subset. Yes, our national security
depends on a healthy industrial base, but gubment
subsidies and control are Not the way to maintain
such a base. those who think so are delusional. -- j