Mega business is not allowed to fail. Maybe at one time it was, but not anymore.
There are 4 classes of business in America - this is not official, just the Steve Hoffacker classification. There's the small business like us - the entrepreneurs and even those that grow their business into several employees but run it as a small business. Then there's regular business which is larger than a small business but not as large as big business. Big businesses are Microsoft, the airlines, oil companies, health care organizations, and similar national and international concerns. Finally there is mega business. Theses are the largest of the large - the institutions. They can't fail, they're too important.
Just today, Nancy Pelosi said that "bankruptcy is not an option" when referring to the plight of the automakers and suggesting that some sort of financial package would have to be offered to them. They are just too important to fail.
However, they're not so important that they need to be run correctly or managed in a fiscally sound way, that they offer a product line that is in step with the consumers, that they don't over-produce for the sake of keeping the workers in the factories busy, or that their products are competitive with similar products in the marketplace.
No they're not that important. Just too important to fail, and that has the Washington bureaucrats scrambling to oblige.
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Steve, Bailing you or me out gets them one vote. Bailing out GM, Ford and Chrysler gets them tens of thousands of Union votes.
Richard,
Oh, so that's how it works? I know helping me out won't get them anywhere. :)
Steve
Steve, I joked around that we should formed a Realtor Union rather than just a national association. They we will be too mega to fail. But few people listened. :-)
Huiting,
In numbers yes, but not in business model or concentration. :)
Steve
Steve, what if we do let them all fail? Interesting concept. What say you?
Bo
Bo,
The scare argument that people use is that a lot of jobs will be lost and that suppliers will be hurt. Don't you think that suppliers and vendors are impacted now with virtually no production? We are a very resilient people. If they fail, this would be an opportunity for them to to reinvent themselves. If they can't, they are plenty of businesses to start. If they did go totally away, the UAW might also. :)
Steve
Isn't this the Donald Trump model? You get banks to loan you enough money that they can't afford to let you fail. The guy is brilliant - but he has weathered some downturns with just this philosophy.
Ryan,
That might be. Even for builders and developers who are hard pressed to remain current with their banks, the banks don't want their properties. What are they going to do with them? It's time for banks to play along like the rest of us - especially with their big bailout. :)
Steve