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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: tradermike_1999 who wrote (9133)9/14/2001 11:57:25 AM
From: patron_anejo_por_favor  Read Replies (1) of 74559
 
To say nothing of the issue of moral hazard. Once again, the government is trying to bail out wild-assed speculators on their bad bets. In a nutshell, it prevents proper discounting of owning risky assets. Speculators (including many large and powerful financial institutions) have come to look at this sort of activity as an entitlement of sorts. The problem is in the long term assets, like water, seek their own level. As more and more people come to expect this sort of treatment, a trap is constructed, whereupon IF the government, for whatever reason, is unable to come through in the future then numbers of people affected and amounts of wealth destroyed will be maximized. That's how so many people got burned in the Bubble collapse we've just witnessed.
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