Moral Hazard and our Great Depression

During the 1997 Asian crisis no banks or companies were bailed out and the economic recession there cleared up in about two years.

That is a huge difference and the bailouts create what is known as a moral hazard. The people who actually caused the problem will not suffer and will have no reason to consider their bad acts a mistake.

There is profound corruption throughout the system in both political parties which is why none of the scoundrels are being punished or even singled out as culprits. In fact they are being rewarded with billions of dollars.

Those who caused the crisis are in the best position to profit from it. Only those who knew how bad the banks were in trouble had the nerve to short them (Goldman Sachs et al) and make billions more from the suffering of others.

So it's unlikely this will clear up in a mere two years as in Asia, the new US administration has many ties to the scandal and will thus not pursue the actual guilty parties but will try to blame others (guess who) and act the savior.

Blue skies Smiling at me, Nothing but blue skies Do I see... Irving Berlin 1927