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In the free-market system, there is no such thing as, “too big to fail.”  It is a made-up term that is used to advance a political agenda.   As such, too big to fail means that the public should accept the premise that the government must use public money to bailout a particular entity that is on the verge of financial failure.  The public will be told that the failure of the entity will be more painful to the public than the expenditure of public money to save the entity—hence the entity is “too big to fail,” which actually means “too big to let fail.”   <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p> But this, of course is economic nonsense.   It is a government-advanced ruse on the public trust.  Failure is exactly what should be allowed to happen.  It is a law of free market economics.  It is also a law of nature.    <o:p></o:p> Take General Motors, for example.  The public was told that GM was too big to fail because of all the job losses that would occur.  In conjunction with this premise, the public was led to believe that a failure of GM would mean that all of the physical capital of GM manufacturing and sales would simply vanish with the bankruptcy of GM.   But the truth is that the physical structure would have continued on much like before.  Employees would have continued going to work, making and selling cars.  The bankruptcy would have merely rearranged the organization of the company by causing sufficient financial sacrifice of employees, unions, pensions, investors, and management to make it solvent.    Bankruptcy would have been a healthy adjustment.  But it would have required financial sacrifice, and the ones who would have suffered the sacrifice ran to the government and complained that they were too big to fail, and the government bailed them out.  It is precisely in that transaction where the term, greed is best applied.
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