Backing a company that is too large to fail is an Obama mistake

I have never been a fan of consolidations in government or business. If you track back to my May 31st and June 2nd posts, I explain my position in greater detail. Cost savings are always disguised when the entity grows larger and more complex. Some of GM and AIG's problems grew out of the consolidations of the past.

Of all of the economic maneuvers of the Obama administration, the strategy that has me most concerned is the continued financial backing of companies that are still considered too big to fail. AIG, GM, Chrysler and major banks have been the recipients of tax payer bailouts. I continue to maintain that no company in America can become so large that it's failure would significantly damage our Nation.

I just came across this quotation that I think the Obama team needs to live by:

"Any intelligent fool can make things bigger and more complex......It takes a touch of genus-----and a lot of courage to move in the opposite direction." Albert Einstein

While the auto industry (GM) is shedding divisions like Pontiac, the underlying intent is to make GM as strong as ever. GM officials will seek to do this in a way that would avoid competition. Removing a Pontiac from the market place will water down the competition for GM. Money thrown at AIG and the banks is going to end up in the hands of overpaid, over-egoed executives. This has already been widely reported to have happened. As for the working middle-class; they have been the ones that are forced to "sacrifice".

I keep going back to the AT&T model here. I think that it took courage to bust apart an American corporate icon that simply became too big and controlled too large a sector of the American economy. I maintain that GM needed to be broken into 4 separate corporations left to compete for our dollars. Insurance and banking industries need to be separated and appropriately regulated. We can no longer afford to let this failed marriage experiment in capitalism lead our lives. If we don't move in the opposite direction as Einstein proposed, our problems will remain with us for decades to come.

tomtoak