But … but … what about bankruptcies induced by a liquidity crunch—the kind the political elite’s propagandists have have been telling me entitle a “too big to fail” company to receive perpetual government assistance?
In those cases, bankruptcy wouldn’t suck up falsehoods, would it?
No. But I think you* are guilty of affirming the consequent. If something is false, then it will end in bankruptcy—but that does not logically imply that everything ending in bankruptcy was false. So something true could still end in bankruptcy (for whatever reason, like a liquidity crunch).
* Or Carlyle, I suppose, but given the choice between accusing a famous thinker of an elementary fallacy and a quick off-the-cuff Internet comment, I’d rather accuse the latter.
If your business is structured such that a liquidity crunch will drive you bankrupt then some restructuring might be in order.
Now one can (and I certainly would be willing) to make the argument that it is almost impossible for a small to medium sized business to structure itself such that a liquidity crunch exacerbated by an inept political class and a rapacious bureaucracy (or a rapacious political class and an inept bureaucracy, whatever).
In that case it’s best to take your ball and go home leaving the enlightened revolutionaries with the society they voted for.
If your business is structured such that a liquidity crunch will drive you bankrupt then some restructuring might be in order.
Eh, that’s what I thought do, but the very idea looks to be beyond the pale. They tell me that we needed to make huge loans on terms no one else could get to prop up some large banks, and it’s “only” to provide “liquidity”. But my thought is: I find it extremely unsettling to be in an economy where such a huge fraction of it is based on business plans this brittle; and the sooner and more spectacularly they die off, the better a foundation future growth will be built on.
But current mainstream thinking doesn’t even allow such a thought.
I also saw people present, as “evidence” of a liquidity crunch, the fact that overnight lending rights spiked from 4% to 6% annualized. Considering that these are the annualized rates for loans with a life of a few weeks at most, this is a trivial increase in borrowing costs. A business so fragile that it can’t withstand paying a few extra pennies for ultra-cheap loans every once in a while … well, any economy dependent on such brittle business plans is living on borrowed time anyway.
But … but … what about bankruptcies induced by a liquidity crunch—the kind the political elite’s propagandists have have been telling me entitle a “too big to fail” company to receive perpetual government assistance?
In those cases, bankruptcy wouldn’t suck up falsehoods, would it?
No. But I think you* are guilty of affirming the consequent. If something is false, then it will end in bankruptcy—but that does not logically imply that everything ending in bankruptcy was false. So something true could still end in bankruptcy (for whatever reason, like a liquidity crunch).
* Or Carlyle, I suppose, but given the choice between accusing a famous thinker of an elementary fallacy and a quick off-the-cuff Internet comment, I’d rather accuse the latter.
If your business is structured such that a liquidity crunch will drive you bankrupt then some restructuring might be in order.
Now one can (and I certainly would be willing) to make the argument that it is almost impossible for a small to medium sized business to structure itself such that a liquidity crunch exacerbated by an inept political class and a rapacious bureaucracy (or a rapacious political class and an inept bureaucracy, whatever).
In that case it’s best to take your ball and go home leaving the enlightened revolutionaries with the society they voted for.
Eh, that’s what I thought do, but the very idea looks to be beyond the pale. They tell me that we needed to make huge loans on terms no one else could get to prop up some large banks, and it’s “only” to provide “liquidity”. But my thought is: I find it extremely unsettling to be in an economy where such a huge fraction of it is based on business plans this brittle; and the sooner and more spectacularly they die off, the better a foundation future growth will be built on.
But current mainstream thinking doesn’t even allow such a thought.
I also saw people present, as “evidence” of a liquidity crunch, the fact that overnight lending rights spiked from 4% to 6% annualized. Considering that these are the annualized rates for loans with a life of a few weeks at most, this is a trivial increase in borrowing costs. A business so fragile that it can’t withstand paying a few extra pennies for ultra-cheap loans every once in a while … well, any economy dependent on such brittle business plans is living on borrowed time anyway.