|Rude Ulf, the Redneck Reindeer|
Had a Very Shiny Blade;
So he used it on his Master, Santa,
'Cause he Never Ever even got PAID.
The definition of Moral Hazard from Wikipedia:
In economics, moral hazard occurs when one person takes more risks because someone else bears the cost of those risks. A moral hazard may occur where the actions of one party may change to the detriment of another after a financial transaction has taken place.
Moral hazard occurs under a type of information asymmetry where the risk-taking party to a transaction knows more about its intentions than the party paying the consequences of the risk. More broadly, moral hazard occurs when the party with more information about its actions or intentions has a tendency or incentive to behave inappropriately from the perspective of the party with less information.
Moral hazard also arises in a principal-agent problem, where one party, called an agent, acts on behalf of another party, called the principal. The agent usually has more information about his or her actions or intentions than the principal does, because the principal usually cannot completely monitor the agent. The agent may have an incentive to act inappropriately (from the viewpoint of the principal) if the interests of the agent and the principal are not aligned.
What many people don't realize, is that, prior to the 2008 Goldman Sach's sabotage of the economy for their own aggrandizement, moral hazard was something worried about and written about quite often in the financial press, not only in terms of banking, where the FDIC's very existence encourages it, but also in the burgeoning liabilities of both Fannie Mae and Freddie Mac, Ginnie Mae and Sally Mae; the GSE's that blared it from the rooftops.
Savvy investors could get an interest rate bump by buying up GSE (Government Sponsored Entities) bonds, collecting a premium over other bonds, with no additional risk, as they were guaranteed by the Government, ie, the US taxpayer, all the while making sure that they weren't one of them, yet, as evidenced by the ginormous US flag still scurrilously wrapped around NYSE's exterior, proclaiming themselves to be "Patriots", yet doing their utmost to pay as little to the government they so espoused to love (ie proclaiming to love something they then turn around and refuse to actually support ... not really something you can entirely blame on them, as Americans are so moronic that that's all they have to do, and no one questions their "patriotism", on the contrary, they extol it). Exactly like a divorced father taking alimony from his wife and kids all the while saying how much he loves them).
The reason the term has totally disappeared from the lexicon is that the entire government and its parasitic private Hoovers, sucking all the cash and stuffing it as fast as they can into their deepstate pockets, is that, the explained by the sudden appearance of the term "Deep State" to begin with.
Just as the OECD nations bask in the glory of their 'End of History" grandeur, bragging about how "Democracy" is the final Solution, they always keep hidden the fact that the way they are able to cater to the needs of their majorities, is by first subjugating and then extorting the natural resources from their satellites, a dynamic that the more obvious it becomes, the more it is ignored.
The Shah of Iran, Iraq's Saddam Hussein, Egypt's Hosni Mubarak, Vietnam's Ngo Dinh Diem, Saudi Arabia's "King" Saud, and Indonesia's Suharto, to name just the most famous, were all installed to deliver to the Democracies the riches of their country that rightly belonged to their countrymen. But, lacking the funds to develop them, the west was more than happy to provide Aid, aid they would then use to siphon off all those resources to their more-deserving, enlightenment citizens who, for the most part, preferred to remain blissfully ignorant of how this rapacious strategy was actuated.
So there is a kind of poetic justice at work as the same stratagem is used against them.
And that's where moral hazard comes in. You see, the reason it's never mentioned anymore, is that we like to pretend we are living in a capitalist economy, where such a term would still be relevant. But when the Fed just buys up "securities" at premium prices to shovel money into the hemorrhaging coffers of so-called "private" Banks, and hence into the Bonus checks of all those financial "Innovators", who dreamed up a Ponzi scheme so transparent even Ben Bernanke could see through it, and when the Fed creates, not billions but a mind-boggling TRillions of dollars and hands them over to well-connected insiders who are all but on the payroll (Except then they wouldn't make even close to the killings (an apt term they snidely embrace) their status as Pirates enables them to, it is not Capitalism at all, it's simply Piracy. It is Anti-Socialism, where the vast majority of the country labors for the few who hail themselves as the indispensables, because they're Oh so goddamned clever. They can take money handed to them --- your money, as you, the taxpayer, are "the principal" referred to in the definition above, and the scalawags on Wall St. are your agents, only their interest and your interests aren't even slightly aligned --- they are, contrarily, diametrically opposed to each other.
This descent into piracy more closely resembles the pre-capitalist economy of Queen Elizabeth. We must give credit where credit is due, (unlike the banks who just lavish it wherever they will), and give a tip of the hat to the dickwads who came up with the term "Quantitative Easing", a term that most definitely is NOT coincidentally the same as Queen Elizabeth's initials. Like "Death Star" and other financial wiseguy sneers, Frat-Boy sardonic supercilious humor is used as a direct slap in the face to those who know what these scofflaws are doing but are helpless to enlighten a public too ignorant of how the "capitalist" system they will fight to the death to maintain, even as they vote for people who are paid to undermine it to the point they have destroyed it, the principal face for that being Ronald Reagan. The Queen Elizabeth of the 80's who let loose the Cowboy Capitalism that grew the government by creating enormous budget deficits that he then funneled to his cronies while his minions cheered him for his promises to do exactly the opposite: "I'm from the government and I'm here to help." His followers cheer madly to these words to this day, always ignoring that the size of the government and its interference in their private lives, mushroomed under his reign and that of the criminal Bushes he was the poster boy for.
The most obvious example being the Bush pere closing of domestic US military bases, where they brought economic benefits to Americans, and transferring them overseas, building them up to sizes never attained by their domestic version, and bringing enormous benefits to the economies of aliens and foreigners, all funded by the US taxpayers, and yet those economic benefits were lost, just when they were needed the most: when the demands put on the economy by hugely-expanded Federal Government outlays, mandated by the same Van Heusen Salsesman his followers still hail as a kind of Messiah, were increasing many-fold. Thus the enormous growth in Deficit spending by a Republican Government that Republicans to this day lay at the feet of the Democratic Party.
Likewise they ignore the doubling of the national debt under Bush from 2000-2008, while whining about Obama doubling it. But the result of Obama's doing so, in order to save the economy from the disastrous state Bush left it in, at least provided a modicum of growth in not only the economy but the employment numbers, which were crashing when the Bush-sabotaged economy limped out of his stewardship, sabotaged for no other reason than to ease the way for the haves to have more, an intent he bragged about and for which he started two wars to deliver. Yet all the Bush doubling of the debt brought was institutionalize chicanery, endemic financial piracy and a collapse of the Global Economy.
A gay Mexican-American from San Francisco recently told me he voted for Donald Trump because "He wanted Change". From what? He's a realtor, a profession that does no more work than it did 20 years ago, but because of Washington's asset-value pumping, rakes in enormously inflated commissions on every sales. Consequently, this individual owns property in San Francisco worth more than a million, property on the Russian River, cash to burn through, so he flips houses at an enormous profit, and yet he wants Change? Apparently having one's assets grow by a factor of 10 (that's right, San Francisco properties that were bought in the eighties have increased in market value to 10x's what the purchase price was when Ronald Reagan took office) ... but that's just not enough ... MORE!MORE!MORE!
And somehow the belief is that The Donald is going to bequeath some bonanza to us. But as I hear the crowds in the Capital Mall cheer the Bush family during today's Inauguration, the country's pre-eminent Corporate-family of crooks and criminals, it all makes sense. The masses embrace their penury, there is, after all, always someone else they can blame for it, the goddamn pinko fairy faggots or raghead muslims or rapist Mexicans, and they now feel emboldened to grind them into the dust at the first opportunity, one they know the Donald will give them. Because it's always the most powerless in society that's to blame. Obviously. That's far easier than admitting it might be the over-arching Nationalism and Militarism that allows the US to bestride the globe threatening any who stand in its way with nuclear destruction, stealth disintegration of their infrastructure, drone-enabled assassination of their leaders, and depleted uranium poisoning of their soil and population. That is, after all, what makes America great.