Wednesday, March 11, 2009
the recession bites deeper...
let's face it, it must be an absolute nightmare not making it in forbes' magazine top 20 richest people list...
bernie madoff. proof that you never want all your eggs in one basket. and also that if you're perceived as rich, somehow you must be trusted.
of course, if you're an ex-banker/financier that has already reaped huge bonuses while helping to drive the world's economies into a ditch and subsequently 'retired' now that taxpayers are stuck with footing the losses, then i guess you've won.
too big to fail simply means an incentive for so-called 'moral hazard'. in the good years, bonuses flow, and when on the rare occasion everything goes so horribly bad (like now) that the institution that showered financial rewards during all those successful years (when they were busy making bad bets) can no longer meet its capital obligations once those bets prove to be a disaster.
heads the banks win and tails the taxpayer loses.