Repeat after me…
March 31, 2008
Nice line from Martin Crook on the need for regulation at the FT:
"Repeat after me: you encourage recklessness if you protect people from its consequences."
Good discussion on moral hazard of intervention towards the end of the article once you get past the bit on Obama/Clinton/McCain – interesting point is that the small risk of huge losses accepted by some banks/hedge funds (whilst in the meantime getting superior returns, see earlier post http://xenomorph.typepad.com/xenomorph/2008/03/hedge-funds-and.html) immediately becomes society’s problem if and when these losses occur – so difficult to isolate society from the risk appetite of private investors: