I remember it so clearly–a memorable illustration from one of my childhood books, Gulliver’s Travels. There he was, huge Gulliver lying flat on the ground, bound in ropes, an unlikely prisoner in the land of the Lilliputians.
Somehow it’s an image that keeps replaying in my mind as the havoc in financial services, and the banking sector in particular, continues unabated. In this case, however, it is the federal government that has become Gulliver, the unlikely prisoner of institutions that sport the now-hated moniker “too big to fail.”
What’s ironic about this is that these institutions–Citigroup, Bank of America, AIG–used to be (if we continue with Gulliver for a while) inhabitants of Brobdingnag, the land populated by giants who were 60 feet tall.
I guess this just shows that Einstein was right when he said, “Everything’s relative.”
Those once-mighty Brobdingnagian institutions, having been evicted from the land of giants, now appear Lilliputian vis ? vis the only behemoth left in town–the federal government.
So there they stand, looking for all the world like another archetypal image, Oliver Twist with his bowl in his extended hand, asking the dispenser of gruel in the workhouse for “more.”
Unlike the gruel master, however, the U.S. government has not yet gone apoplectic in disbelief. With all due respect, I think it’s about time.
The big question of the moment is will some of these mortally injured giants be nationalized? Just how big a stake, I wonder, do the feds need to have before an institution is considered nationalized?