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Article: Analysis: Moral hazard and risk - I.
- Article from:
- United Press International
- Article date:
- December 16, 2002
CopyrightCOPYRIGHT 2002 United Press International. 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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SKOPJE, Macedonia, May 30, 2002 (United Press International via COMTEX)
The reallocation and transfer of risk are booming industries. Governments, capital markets, banks and insurance companies have all entered the fray with ever-evolving financial instruments. Pundits praise the virtues of the commodification and trading of risk. It allows entrepreneurs to assume more of it, banks to get rid of it, and traders to hedge against it. Modern risk exchanges liberated Western economies from the tyranny of the uncertain -- they enthuse.
But this is precisely the peril of these new developments. They mass manufacture moral hazard. They remove the only immutable ...