Moral Hazard is a wonderful thing! NOT.

Moral Hazard is a wonderful thing! Part of the fundamental role of regulatiom is to avoid it, and yet in our increasingly short term world, politicians and voters alike are unwilling to take short term pain for a long term benefit. Like letting some of these companies pay the price of poor liquidity risk management. Even liquidity/capital injections just make the problem more trenchant the next time. Sometimes i think that risk management only works against a stable context, some lender or provider of liquidity of last resort, a government, an insurance company, and IMF, and without it the network of relationships crumbles. As institutions get bigger and more global, there is no longer some JPMorgan in the background ready to bail out the system. Perhaps this suggests too big to fail really is just too big...