Why are banks “too big to fail”?
Back in the olden days there was a saying that went like this:
Don’t put all your eggs in one basket.
The general idea being that a distribution of eggs throughout several container would mitigate the loss of one container and damage to said eggs whereas a single container results in the loss of all eggs if the container somehow fails. In banking the analogy is that the banks are the baskets and the eggs are our money.
Fairly obvious really. Why is it then that banks and other large corporations are allowed to grow to such a size that failure of any one of them can result in disaster for the whole economy? Shouldn’t there be some kind of monopolies commission, government body or something in place to stop companies from growing too large and threatening the stability of society? Just a thought.
This is also an excuse to post this picture: