Thursday, September 24, 2009

Which Moral Hazard?

Damian Paletta reports:

"Treasury Deputy Secretary Neal S. Wolin on Thursday said that if policy makers don’t make changes to financial market rules, the extreme government intervention in the economy might end up making things worse.

“There is no question that, unless we enact meaningful reforms, the fact that the federal government intervened this past year will have made the problem worse,” he told a group of bankers in a speech. “We take this moral hazard challenge very seriously.”

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Which moral hazard would that be? Dick Cheney promising our oil creditors that government will always make them whole? Congress Persons going behind the Fed's back and getting commitments from banks to move lots of Congressional debt paper? The Fed laundering money for foreign banks? Obama wanting another large taxpayer loan to complete a campaign promise? Economists faking Keynes to predict more future than there is on the horizon? Too many financial cooks and not enough broth? Or just wishful thinking?

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