Originally Posted by
Wesley Mouch
The idea that businesses who aren't prepared for rainy days should be allowed to fail isn't 'stupid'.
There is a reasonable argument that the moral hazard is created by our willingness to 'bail out' businesses who fail.
We have two choices in how we structure our economic society.
1) Bail out those who fail, or
2) Let them fail.
If the US Auto industry had failed, I would have lost tens of thousands of dollars in investment. Instead, that investment was restructured, and I ended up with shares of the new GM that have done quite nicely. Moral of the story. Don't build resilient businesses. Run on the edge to chase maximum profit, and if things go bad, you'll get bailed out.
Worked for GM and Chrysler. Worked for Wall Street. Let's do it again.
A collapse would have been painful. Really painful. But we'd all be better off with a more responsible Corporate America in the end.
IMO, bail outs are 'stupid'.