- Today, we’ll discuss how the “too big to fail” concept has evolved since it was first used back in 1984.
- The U.S. stock market to pension funds relation shows that even the stock market is simply too big to fail.
- In Europe, the situation is even worse. Everything there is too big to fail, from countries to corporations to junk bonds.
“Too big to fail” is a concept that you probably recognize from the 2009 financial crisis when many corporations, particularly financial institutions, were considered too big to fail due to the negative impact their demise would have on the whole economic system.
In order to prevent massive negative effects on the economy, and also to prevent a 1930s depression-style situation, governments intervened and bailed out the distressed assets. More →