While I agree with you that "too big to fail" cannot be allowed, it always has to be a preemptive action. You must regulate the market so that there are zero "too big to fail" institutions. If you get in the position where they are "too big to fail", well, the expression means exactly what it says really, the effects are too disastrous and simply thinking you can bite on the bullet and survive the rough-patch won't do, that option has already been eliminated when you put the TBTF label.I think there should not and cannot be a "too big to fail", neither banks nor Greece or anyone and by intervening our governments are messing up the free market that should regulate itself, using money of people who aren't really involved, much less responsible for the problems. I don't care whether the economy would fail otherwise, in that case the free market and economy are simply a failure and shouldn't be artificially sustained, period.
You get back on your feet, then knock them down to size. That it didn't happen is a separate issue of the US (and now EU) political system.
I know it's not what one wants to hear, but it is also the inescapable truth. Twenty Lehman's at once would lead to more than blood in the streets eventually and while you may think that necessary, it never is an option for the ones who won't make it until the end. So these arguments at this point in time are superfluous.
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