So, I had questions about how we should respond, including the moral hazard risk of encouraging ever growing numbers of children to attempt the perilous journey if we said all were welcome.
But at the same time, we don't want the whole global economy to collapse, so that's the argument in favor of taking the moral hazard risk and just bailing them out.
They appear to have concluded that it is better to court moral hazard than to risk setting off another round of instability.
Financial support without conditions attached would increase the risk of moral hazard.
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While nobody wants to see a family locked out of their house due to foreclosure, we run the risk of moral hazard if we continue to reward irresponsible behavior.
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Greater fiscal integration requires the upfront and ongoing commitment of voters and officials across member countries and increases the risk of moral hazard like free riding and breaking of covenants in the future, especially from member states that would be required to execute tough reforms.
Given the risk of banking or sovereign moral hazzard are some prices just too high to pay?
And the consequent decision-making flaws included inadequate contingency planning, insufficient information search and biased assessments of risk, cost-benefits and moral implications.
Now he has teamed up with a professor from Carnegie Mellon University, a professor at the University of California, Berkeley, and a colleague from Harvard to argue that recent reforms have failed to reduce the risk that auditors will fall into moral traps.
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And fine calculations about moral hazard are less pressing when investors are fleeing risk.
The theory behind Glass-Steagall (and GS-lite measures like the Volcker Rule and the swaps pushout provision of Dodd-Frank) is that banks with insured deposits are subject to moral hazard, and will take on too much risk.
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He says voting in favor of the ID cards may allow San Francisco supervisors to take a moral stand on immigration, but it puts the city at risk.
The moral of the story: It is better to go hungry than to risk elevated cholesterol.
The key insight here is that systemic collapse brings about its own form of moral hazard as the safe thing to do is not to try to find smart ways of accessing risk, but to make sure that when the crisis comes your bank fails in the typical way.
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