Admittedly, there are numerous problems with this particular model. For example, when a company fails, thousands can lost their jobs (and wont get them back for a long time before a stronger company takes its place).
So what's the solution? ... Perhaps... Obama's call for companies like GM to "restructure" before getting more money. Fix the company so it doesn't go under, no one loses their job, and it changes and starts running on a better business model.
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