Subprime Bailout: Good Idea or Moral Hazard? : NPR

http://www.npr.org/templates/story/story.php?storyId=16734629


In the long long run, perhaps it’s more harmful to create a moral hazard that encourages capitalists to behave recklessly.

But the fact that it’s happening AGAIN will hopefully be enough for some Americans to form an understanding of what is really going on here.

Disclaimer: Look I’m no expert. Not to discredit everything I wrote in in the posts above, but I merely only studied Introduction to Economics for one year in high school and 3 units of Macro-Economics in college as a pre-requisite, and my educational background is only based on Philippine education under the American system of instruction; also, in real life, I am horrible with my personal finances, but good in at least having made profit when I worked in my family business.

But the one most important thing I learned outside school, working side-by-side with my father, a doctor and businessman, was what he taught me: that the essential moral underpinning of capitalism is that entrepreneurs deserve to make a profit because they are taking risks. Many ventures fail, so under capitalism, things can happen that might not otherwise.

So what then happens to that moral underpinning when it turns out that such a big enough risk can be shrugged off onto taxpayers, while profit remains in private hands? If it happens with regularity, it starts to look less like a "natural business cycle" and more like a huge fucking swindle.

[ Continued below.]

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About Klassy

How Klassy got her groove back.

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