Depends how you lose your money I think
Reader comment on: More on Trumka and Private Equity
Submitted by benjamin (United States), Apr 13, 2010 20:40
If I invest in a technology company because I think everyone is going to want a new kind of electric razor, and it turns out they don't, I made a bad investment and I should lose my money. This seems a bit different than investing in Lehman Brothers bonds under the impression you are getting one thing, and then it turns out that Lehman has been moving the money around to shell companies to hide the state of their balance sheets. It is also different than companies that pose a systemic risk and therefore have an implied guarantee from the government. They must be regulated far more heavily so that the government never has to put up taxpayer money to bail them out.
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The Future of Capitalism replies:
The whole notion of an "implied guarantee" I find problematic. There should either be an explicit guarantee or no guarantee at all. That way it'd be clear to everyone what the rules are. The government's "implied guarantees" are are actually kind of like Lehman or Citi or Enron's off-balance sheet obligations. It's a way of obligating the taxpayers (or shareholders) in an opaque rather than a transparent fashion, so as to hide what is really going on.
Other reader comments on this item
|⇒ Depends how you lose your money I think|
[w/response] [123 words]
|benjamin||Apr 13, 2010 20:40|
|↔ I agree completely [270 words]||ben||Apr 14, 2010 08:17|
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