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Post details: The Age of Dinosaurs

The Age of Dinosaurs

We live in the age of Dinosaurs.

In a clear sign that many large corporate behemoths have trouble acclimatizing to the tough economic environment created by the impact of the subprime comet, Bloomberg reported today that "General Electric Co., the biggest U.S. issuer of commercial paper, plans to use the Federal Reserve's new short-term funding facility, throwing its weight behind the central bank's efforts to unlock the credit markets."

So the company that Thomas Alva Edison started as a little manufacturing shop for electrical devices more than a century ago is running out of cash now. According to Wikipedia, not only is it involved in operations involving transmission and distribution of electricity, lighting, industrial automation, medical imaging equipment, motors, railway locomotives, aircraft jet engines, and aviation services, but 50% of their current revenues comes from financial services. Interesting.

There is something fundamentally wrong with the world where companies grow to the point where it is beyond the inherent limits of a human mind to fully comprehend the complexity of their operations. Make no mistake, the captains of these giants will assure you that they hold the rudder firmly in their hands and know where they are going, but recent events show that their sense of orientation is hazy at best. Claiming that they can foresee all the trends and undertows that pertain to their many businesses and make informed decisions is like saying that they can predict the weather in New York City on March 17, 2011. Nearly impossible to put it diplomatically. But General Electric is not the only leviathan that finds itself stifled by its size. Microsoft, JPMorgan, AIG and a host of other corporations have become cretaceous reptiles in their own right.

The problem with economic dinosaurs is that their only concern is growth at any cost. And so they grow and grow and grow some more - to the point where the mere logistics of moving their bodies around prevents them from functioning efficiently. Moreover, when they become "too big to fail", they pose significant risks to the very foundation of the capitalist system, the process of pruning the dysfunctional branches of waning industries. Factor in the cancer of greed and corruption which any overgrown and non-transparent system engenders and you have a recipe for a geological scale disaster.

I wish we lived in a world where small companies did business with each other rather than swallowed each other; where firms focused on their core business and didn't poke their entrepreneurial noses into a pyramid scheme du jour. I wished we lived in a world where small banks would make the loans based on the soundness of underlying ideas rather than the fatness of fees they collect for financing them; where the lenders took the risks of their loan portfolios themselves and managed them with common sense, rather than peddling them as esoteric securities to unastute suckers on the other side of the globe, who might have no idea that the commercial space in this neck of the woods had already been overbuilt. I wish we lived in a world where representatives knew their citizens and the citizens knew their representatives; where slim and local governments would administer the resources and needs of their communities, rather then delegating the job to overblown bureaucratic amoebas in far away places that go into seizure mode any time a major hurricane strikes the land.

I wish we lived in the age of mammals.



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