September 2011 Macro Pulse -- From Too Big to Fail to Too Big to Save?

Although the term “too big to fail” has been in the economics lexicon for a long time, it was not a term typically tossed about at cocktail parties -- until the Lehman Brothers 2008 bankruptcy. At least in the United States, since then the phrase has perhaps been applied most often to firms (e.g., General Motors) deemed too crucial to the U.S. economy to be permitted to “go under.” The prevailing attitude overseas was that countries were “too big to fail.”


More recently a new variant of “too big to fail” has emerged: “Too big to save.” As the size of companies -- and now countries -- that are teetering on the edge of insolvency continues to increase, policymakers are realizing there are insufficient funds in the system to keep such foundering entities afloat. Particularly with respect to Europe, officials there have been implementing half-measures that, arguably, are likely to accomplish little more than postpone the worsening inevitable. Given the interconnectedness of the world’s markets, insolvency of a European country could have profoundly adverse effects on the U.S. economy.

Beyond Europe’s troubles….

Click here to read the entire September 2011 Macro Pulse recap.

The Macro Pulse blog is a commentary about recent economic developments that affect the forest products industry. That commentary provides context for our 24-month forecast, which is contained in the monthly Economic Outlook newsletter available through Forest2Market. The monthly Macro Pulse newsletter summarizes the previous 30 days of commentary available on this website.