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Wednesday, 27 June 2012

Moral Hazard 101

If there is one thing I remember from the Economics 101 class back in in the early 1990s, it is the concept of "moral hazard". Well, the politicians are continuing to forget/ignore moral hazard (not sure what percentage of them has ever taken an Economics 101 class though..) as they continue to bail out banks and countries. Cyprus is up next.

So, here is an easy-to-understand reminder to politicians of what moral hazard is.