Wednesday, November 12, 2008

The economic crisis: Breaking up is hard to do

I know this is basically a running blog but when you believe you have the solution to a problem as big as this, you have to speak up.

I think I have a solution to our economic crisis.

The solution in 25 words or less.
Require companies that are receiving government bailouts to break up into smaller companies. That’s it.

The reasoning
It’s quite simple really. Breaking up a company into smaller pieces may not prevent every single one of them from failing…but if they do fail, it won’t be all at once and the economy can (hopefully) absorb the losses. And, if some of the pieces survive, it’ll be because they provide a needed product or service at a competitive price; which is what we all want…isn’t it?

What we don’t want is large companies (who are about to fail) getting government bailout money to use to buy up their competitors. Maybe I’m too simple minded but helping to increase the size of a failing company just doesn’t sound right.

I don't think this will prevent our economy from a recession but I do believe it will minimize the possibility that the next crisis will be even bigger.

This solution will be difficult to execute. Not all companies are equal; time frames will have to be set, criteria for bailouts, etc. So, yes, this will be hard. But breaking up is hard to do.