Posts tagged Moral hazard

Not with a Bang

29
1 year ago
by dcpetterson in
Life, the Universe, and Everything Texture... ...

The Answer to the Ulti­mate Question?

What caused the 2008 world­wide eco­nomic col­lapse? I don’t really know, and I don’t think any­one has The Ulti­mate Answer. We’ve all heard bits and pieces, we’ve all heard argu­ments, and there have been pun­dits and politi­cians who have made claims of per­fect knowl­edge. Let’s have a dis­cus­sion about what we know and what we think.

Here’s some­thing I recently learned. The $1.7 tril­lion in sub-​​prime mort­gage loans is often held up as one (per­haps the major) con­tribut­ing fac­tor. It pales into insignif­i­cance beside the unreg­u­lated $600 tril­lion deriv­a­tives mar­ket, of which those mort­gages amounted to less than three tenths of one percent.

Okay, your eyes are about to glaze over. I can see it from here. Hang in there. (more…)

The Dark Side of Personal Responsibility

39
1 year ago
by Michael Weiss in

I’ll admit it…I sup­port per­sonal respon­si­bil­ity. I don’t want to pay for the irre­spon­si­ble actions of oth­ers. I want peo­ple to suc­ceed or fail based on the mer­its of their actions.

It all makes me sound like a Repub­li­can, doesn’t it?

See, the prob­lem with peo­ple being able to col­lect on suc­cess while not hav­ing to pay for fail­ure is that it cre­ates what’s called a “moral haz­ard”. Peo­ple behave dif­fer­ently when they have lit­tle or noth­ing to lose, and much to gain. (more…)

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