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John Lounsbury
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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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John B Lounsbury CFP
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Global Economic Intersection
  • Bankruptcy is Mythical 1 comment
    Feb 10, 2011 12:56 PM
    There is a review at Naked Capitalism of a historic economic research paper from Harvard that has been leaked prior to its official release date of April 1, 2011.

    Follow the link to read about this monumental work on the Mythical Bankruptcy Theorem.  Kudos to Yves Smith for having captured this leak. 
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  • extremebanker
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    Current bankruptcy law is one reason American capitalism is having difficult times. It is very difficult to get rid of poor competitors. Companies with bad management and a bad business model can bankrupt on Friday and reopen for business on Monday with much less debt and can continue their same behavior that put them in bankruptcy to begin with. This reduces margins of good companies because inevitably the bankrupt companies will have to offer discounts for business thus putting pressure on solvent competitors. It goes on everyday. Bad management and bad models should be closed down so the remaining competitors can remain strong. Our bankruptcy law drags good companies down to the levels of the poorly run companies. Our education system is an analogy to this same concept. Everyone is dumbed down to the level of the worst students and teachers because they cannot be eliminated from the system. Capitalism has to have failure to rid the markets of inept competitors.
    10 Feb 2011, 05:07 PM Reply Like
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