He puts his finger on something that bothers me about all this "too big to fail" business, and it's namely this: that if investors come to believe that the government won't let something fail, then there's no reason for that something to take risks responsibly. The whole thing ends up being a confidence game. The other morning I was listening to an interview on the (excellent) public radio program
Marketplace with Jim Rogers, a Singapore-based US investor, who was ripping the federal quasi-bailout of Fannie and Freddie.
Here's an excerpt from the Rogers interview:
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