If I invest in a corporation or an LLC all I risk losing is my principal. I can’t invest $100 but lose a million.
But how should it work if your government goes bust? Iceland is facing this question today and Greece and California must deal with this question soon.
Many of the government liabilities are based on decisions made while I was a citizen. So during my lifetime I was a citizen of California for about 36 years. So should I be on the hook for 36 years worth of their unpaid debt? I sure hope not. Maybe we should only count my adult years as a California citizen; this reduces my exposure to only about 20 years – but it reduces everyone else’s exposure as well. So I might not be better off with this interpretation.
Liability in corporations in limited to what one invests but perhaps we need a system in government that results in its citizens being more accountable.
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