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The Euro crisis is certainly not a good example of this: it stems not from equity injections in broke banks but rather from the lack of a competent central bank. After all, if a state lacks the funds to inject equity into its banks, that equity can be created by the central bank with just the stroke of a pen, or rather the click of a button on a keyboard. If you have a competent central bank, that is.
Peak oil is not an energy crisis. It is a liquid fuel crisis.
Moral hazard is the last refuge of the scoundrel.
Between moral hazard and mass unemployment, I choose moral hazard every time.
If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
However, such projects cannot be conjured forth on demand, they must be prepared ahead of time. And in the absence of such preparation, the alternative to debt writedown is make-work. Which is not without problems of its own.
In a properly regulated financial system, such moral hazard creating events would be rare, because in a properly regulated financial system lenders are prevented from lending to overextended borrowers, speculators and Ponzi merchants.
Austerity can only be implemented in the shadow of a concentration camp.
Not because such an alternative is desirable, but because it sets a lower bound on the decadence to which capitalism can fall. A lower bound which would otherwise, judging by historical experience, be wholly absent.
After price crash in housing market it's also a moral hazard to leave only the debtor to foot the bill.
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