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Creating the Next Crisis
- hga 16y agoSome good points about moral hazard, but the author confounds two types of bailouts: ones that protect the financial system and ones that don't (e.g. GM, maybe Greece). The former are thought to be necessary despite the moral hazard risk (which arguably lead to Leahman not cleaning up it's act after seeing Bear Sterns get bailed out), you don't want situations like what happened in the 1929-33 period when 8,000? or so banks failed, in a period without deposit insurance to cover the smaller depositors. Things that wreck the system(s) by which people and companies do their day to day business are to be avoided.