Saturday, July 10, 2010

Brand Names dissapear as the economy flounders; it's survival of the fittest. Or is it?

Many long established companies are going under, except of course for some who are favored by government, and kept going on taxpayer's money:

24/7 Wall St. Ten Brands That Will Disappear in 2011
24/7 Wall St. has created a new list of brands that will disappear, which includes Readers Digest, Kia Motors, Dollar Thrifty (NYSE: DTG), Zale (NYSE: ZLC), Blockbuster (NYSE: BBI), T-Mobile, BP plc (NYSE: BP), RadioShack (NYSE: RSH), Merrill Lynch, and Moody’s (NYSE: MCO).


Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) were on our earlier list. We were wrong about them closing. They have become “wards of the state,” kept open by the US government to help maintain an orderly mortgage market. It is estimated that keeping the two firms open costs taxpayers about $7 billion a month. The companies lost a combined $291 billion in 2009. Members of Congress are pushing to have the companies shuttered. It is almost certain that they will not be around, at least in their current forms, much longer. One estimate is that the cost of supporting the two companies will total $1 trillion, making it more likely that they will be closed in the favor of other alternatives to maintain the mortgage market. [...]

In a sensible world, Fannie and Freddie would be shuttered, but economic sensibleness seems nowhere in sight, so I'm not so sure. Fannie and Freddie are government created entities, and the government has their own reasons for maintaining them, at any cost, apparently.

Read the whole article for other companies that are about to disappear. Some of them, like Newsweek, I won't miss. But who knows, they may get a bail-out too? More money taken away from the productive people who earned it, and given to unproductive people who squander it? And the surviving, profitable companies who are paying their own way, are then forced to compete with the unprofitable, government subsidized ones? How fair is that?

Rewarding failure, and punishing success. Change You Can Believe In.

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