Tuesday, March 10, 2009

Getting Over the Hump

Wow, it has been over a month since I last posted anything. The doldrums of winter combined with economic doldrums are my excuse. I have had no enthusiasm for posting.

I've been reading about AIG and why we 'need' to save it from collapse. It seems that they are not just the largest insurance company in the world backing up millions of pension funds but they are diversified with fingers into all aspects of our economy. As one example the paper said that a subsidiary of AIG leases airplanes to most of the major airlines. If AIG goes broke, the subsidiary goes broke and the airlines go broke, etc. My son and daughter-in-law know about that kind of chain reaction. It wasn't many years back the (profitable) company they were working for went out of business because it was owned by a larger company that went bust and left them both out of work. It was a much smaller scale version the sort of what would happen if AIG goes down.

Diversification is a good thing if you are an investor or a small business. If one of your investments goes bad or one of your customers fails you have others to fall back on. Working in reverse however, a top down diversification of huge conglomerates apparently has the opposite effect of destroying the otherwise successful below it when the top fails. In my economically untrained opinion one of the things we should be looking at is limiting the size of companies so that none are allowed to get so big that if they fail they take the whole economy down with them.

Weatherwise Northern NY is seeing the start of the annual wrestling match between winter and spring. After a string of nights hovering around 0ºF (-18ºC) we had a couple of mild days where the high reached around 50ºF (10ºC) and then yesterday we enjoyed a mix of snow, sleet and freezing rain. Over the course of the day I got to clean ice off the windshield three times. Oh joy. I'm looking forward to green shoots pushing out of the ground.

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