I don't know Henry Paulson.  Is he a decent guy, trying to do the right thing in difficult times?  Probably.  Is it just a coincidence that, as a former Goldman Sachs executive, he oversaw the demise of three of Goldman's biggest competitors, Lehman Brothers, Merrill Lynch and Bear Stearns, while Goldman lives on?  Probably.  Is it relevant that the vast majority of his wealth is held in Goldman Sachs stocks?  Probably not.  But there is no mistaking that the actions that led to him being dubbed "Mr. Risk" is a strong indicator that his philosophy of extensive leverage is part and parcel of the current crisis facing the financial institutions.

We're facing a unique problem in that those who are advocating extreme measures of government intervention in this crisis are doing so not because they necessarily want a socialized economy, but are acting in order to preserve a free market.  In this article from CNN, Paulson himself admits to such a way of thinking.  His rationale is that government intervention is necessary now because it wasn't implemented earlier.  Meaning, the current businesses needing a bailout need it because they are too big to fail and that the government should have come in and prevented them from ever being too big in the first place.

I would like to know by what standards (and who dictates when) a company is deemed to be too big.  Is it $1 billion in assets?  $10 billion in annual profit?  $15 billion in gross revenues?  Is it having 90% market share of a particular industry?  Are there companies out there already too big to fail that need to be dismantled?  What about Mobile/Exxon?  Google?  Johnson & Johnson?  And who do you think is going to lobby the hardest to politicians in order insure that their company doesn't fit the criteria? 

I wonder if the problem is not that these companies are too big to fail, but that the engaged in practices that caused them to fail.  The previous companies mentioned like Google and Mobile/Exxon are not in the government's sights because they haven't jeopardized themselves to the brink of annihilation.  And the government isn't likely to step in to terminate a solid company that is making sound decisions and growing large as a result of delivering a product or service effectively to the public. 

While the decisions in Washington seem to be indicating that the problem is the size and scope of these institutions, I think that lurking beneath the surface is the risky and failed practices that these institutions engaged upon.  I fear that the government's intervening actions today will lead to a practice in the future in which the government actively seeks to prevent big businesses from failing at all.  And with that, I see that such a goal not only conturary to the philosophy of a free market, but that it is simply moonshine.

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