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Tuesday, September 16, 2008

Very Dire

Feds looking for another bailout.  
The tradeoff is: Do nothing and risk major recession or worse (the D word has been spreading).
Do something (some sort of bailout loan backed by tax dollars etc) and risk increasing an already present moral hazard that has been created - a kind of understanding that company's are learning they can take more and more risk because, if their ventures fail, the government will come in and rescue them.  This amounts to the socialization of risk. 

I don't know which tradeoff is worse.  The only thing I know for sure is that both have major downsides. 

We are in an ugly place, folks. 

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