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Financial companies take calculated risks for themselves to make profits. But they don't have to take into account the effect of any losses they may cause in t
by anewaccountname 18y ago
Financial companies take calculated risks for themselves to make profits. But they don't have to take into account the effect of any losses they may cause in the economy as a whole (or more precisely, they only have to consider their share of them). How do you propose to get out of this collective action problem without some form of government regulation?
- corentin 18y agoThere is this moral hazard precisely because the government ends up bailing out the irresponsible (following the "too big to fail" mantra). Instead, just let the financial companies (in fact, all companies, including GM) take full responsibility for what they do.