- Moral Hazard, Government Style In Estonia
In 2009, when the U.S. authorities bailed out some of the key participants in the sub-prime mortgage debacle, it became clear (to paraphrase George Orwell) that “all are equal, but some are more equal than others.” Regardless of its political hue, the government was going to offer a helping hand to such giants as AIG or Citigroup, creating, in economists’ parlance, a problem of moral hazard.
At its core, moral hazard is about an absence of responsibility for one’s risky or incompetent behavior. Companies deemed “too big to fail” can engage in risky investment ventures or delay painful restructuring, knowing that the economy-wide ramifications of a potential collapse will force governments to dole out generous bailout packages.
Not surprisingly, the recent crisis has cast the moral hazard problem almost exclusively as a hallmark of large corporations, thus creating a legitimate opportunity for government interference. The government itself, however, is by far the most likely and dangerous source of the problem. If being too big to fail is a tell-tale sign of moral hazard situations, then the government apparatus and the politicians who service it become natural suspects.
Even in free-market economies, however, governments can still be susceptible to moral hazard situations. Consider Estonia, known until recently as one of the most business-friendly economies in Europe, a country that joined the OECD in December 2010 and adopted the Euro in January 2011.
In 2001, the government of Tallinn, the Estonian capital city, sold a majority of its share in Tallinna Vesi, a Soviet-era water utility, to U.K.-based United Utilities Group PLC (UU.L). As a part of the deal, the investor agreed to upgrade the quality of the drinking water, to bu 2009年に、米国の当局は、サブプライムローンの崩壊で重要な参加者の一部を救済するときに、明らかになった（言い換えジョージオーウェルに）。。u0026quot;すべては同じですが、一部は他よりも等しいです
- More Regulation of World Finance Needed, Says Soros
Hedge fund manager and conspiracy theorist fave, George Soros, told The Economic Times of India that more regulation of global finances is required, but just how much regulation is subject of serious debate between the world's leading economies.
<blockquote>The role of the regulators should be to exercise mainly thorough a free market. So you want to have markets as free as possible because while markets are unstable, regulators are even more imperfect than markets because they are subject to political influences they can be corrupt and they can be mistaken. So their role should be kept to a minimum but what that minimum is, is a matter for debate."</blockquote>
Soros also levied harsh criticism on US politicians and their inability to regulate the bulge brackets in the US. Without naming brand names, Soros told the Economic Times that the banking system has become too oligarchical. Instead of the financial powers being regulated more by the state following the near catastrophic 2008 derivatives crash that cost the equivalent of Japan's entire GDP, the state has instead opted to blame itself for the problems and regulate less, he said.
<blockquote>The regulators failed to regulate the economy that is why you had a crisis and when you had crisis then they had to keep the financial institutions alive in order to prevent the total big round and this creates what is called a moral hazard which allows the financial institutions to indulge in excessive lending and excessive profits and excessive stimulation. Because, if things collapse, then the regulators have to pick up the pieces," Soros said.</blockquote>
The billionaire investor seems to believe that financial markets, the Central Bank governors, state regulators and politicians ヘッジファンドマネージャーは、陰謀論者のファーベ、ジョージソロス氏は、グローバル財政のさらなる規制が必要ですが、どれだけの規制は世界有数の経済の間の真剣な議論の対象とされていることを、インドの経済紙に語った
- Nervousness is growing over price pressures on mainland
Ask most watchers how they rate China's reaction to the 2008 financial crisis and the chances are that they will give Beijing 10 out of 10 for its policy response. While policymakers in other large economies bickered about moral hazard, the Chinese authorities showed no hesitation.