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Too Big to Fail – Atlas Shrugs

Too big is a term that gotten a lot of mileage.  There is another way to state it.  That is: the ones who got us into this mess.  The list is getting pretty long.  But there is a 400# gorilla in the wings.

That is the state of California.  And, it is capable of making Wall Street and Detroit look like pikers.  For some reason they still enjoy investment grading of their bonds.  But they've been warned to straighten out their $24+ billion shortfall or see their bonds seriously downgraded.  That will increase the rate paid and increase the problem.

This is a liberal era.  Spending was too massive under a supposedly conservative in Bush.  We are record spenders in nation, states, and towns.  And, we continue to plan increases.  We must -- for the good of our health and the health of others or some other great bit of social adjusting.  We can afford anything and everything it would seem. 

It is time for a reality check.  Nobody or nothing is too big to fail.  One cannot postpone paying the piper forever.  We see it in the real world all the time.  You run up the old credit card and solve it by getting two more.  That isn't a solution; that is postponement and adding to the final, inevitable injury. 

I'd been long writing that the problems weren't as big as the media and politicians had made out.  That was or at least could have been true during all those election sound bits.  But, I thought we could become rational after the election.  That isn't happening.  The reverse seems to be the new norm.

Like the guy getting two more credit cards, the government cannot spend its way to happiness.   The outcome  is a tradition that has affected citizen and nation – time and again.   That is the cycle of boom and bust.   It is a cycle that economist, business, invention and a host of other claimants have often declared broken.   Computers would do it. Social programs would do it.   Rising home values would do it.  The Internet would provide this mass intellect that would do it.  Mapping the genome would do it.

It all boils down to what a noted Sci-fi author told us in his novel:

The Ain't No Such Thing As A Free Lunch.

That's pretty close to the view of Ayn Rand and the Libertarian like those in the Austrian school who influenced a former Fed chairmen and his Nobel winning fellows at the University of Chicago.

All this boils down to  the emphasis of individual rights – including those of property.  It states that a constitutionally limited government must be the base. 

Like those who in the past rushed to some new idea to stop the boom and bust cycle, you cannot ignore the simple facts and expect greater success. 

Everyone is talking about the possibility of a 30's style depression.  Without a reality check, we could end up hoping for better times like the 30's. 

That doesn't have to happen.  In fact it is still unlikely.  Not because we are solving problems properly but because we will either be forced to view reality or see such failure occur.  And, up to now, we've always thought about more than just our own future and bit the bullet.

Is California too big to fail?  No, it is just ready to affect the entire nation and make Black Friday barely tattle-tale gray.  And, though it is the 400# Gorilla of failures, it shares the too big to fail space with every entity that makes up this economy.

Most reading this play poker. Whether profitable or not, one fact separates the men from the boys.  That is bankroll management.  It keeps one from self-destruction.  Time for government and nation to start acting like smart poker players.




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