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Article: Moral hazard and the financial crisis.(Report)
- Article from:
- The Cato Journal
- Article date:
- January 1, 2009
- Author:
CopyrightCOPYRIGHT 2009 Cato Institute. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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There is no denying that the current financial crisis has delivered a major seismic shock to the policy landscape. In country after country, we see governments panicked into knee-jerk responses and throwing their policy manuals overboard: bailouts and nationalizations on an unprecedented scale, fiscal prudence thrown to the winds, and the return of no-holds-barred Keynesianism. Lurid stories of the excesses of "free" competition--of greedy bankers walking away with hundreds of millions whilst taxpayers bail their institutions out, of competitive pressure to pay stratospheric bonuses and the like--are grist to the mill of those who tell us that "free markets have failed" ...