"Moral hazard is the probability that a party insulated from risk will behave differently from the way they would behave if fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act with increasing recklessness, literally 'without reckoning." It also encourages the rise to power of the sociopath in the affected organizations.
It is difficult to explain moral hazard to tenured professors or the pampered princes of bureaucracy, who beat the drum with their silver spoons in support of shifting the risk of loss to the public every time that Wall Street falls into one of its own schemes and blows itself up.
It is a lesson that the average person learns by the age of twelve and relearns, sometimes spectacularly, at least once in young adulthood. If you do something wrong there can be bad outcomes, and you will pay the price and penalty. Unfortunately there is a small but powerful oligopoly of privilege that is trying to project themselves onto the global stage while believing that they are immune to ordinary consequence, and have become addicted to the notion that 'others must pay' for their failures.
Moral hazard comes from rewarding bad behaviour in markets with wristslaps and bailouts. It is a danger to the economy and to the public."
Jesse, Moral Hazard, 22 March 2008
"I may have made an error in judgement— but one thing is beyond dispute: the man was able to work his way up to leader of a people of almost 80 million. His success alone proved that I should subordinate myself to him."
Adolf Eichmann
"There is probably no greater threat to the faithful than that of the sanctifying of success with worldly measures. Invariably, when a principled belief aligns itself with the state, and the wealthy, and the powerful, it ends up as lost as if it was suffering persecution."
Jesse, Sanctifying Greed, 6 June 2023
Stocks had the wobbles today, but managed to hang on to their perches.
Gold and silver also marked time in place.
The Dollar fell.
The VIX remains supine.
The FOMC will be making some noises this week Wednesday.
The expectations are for a 50 bp cut. A 25 bps cut will disappoint. Doing nothing will shock.
There is an option expiration on Friday.
Big events are in play. It is stunning to see how little attention they receive.
Our generation is like so many others that have come and gone before us.
We believe in comedians, sociopaths, and charlatans.
We do not believe in plagues.
Let's see what happens.
Have a pleasant evening.
