Moral Hazard

Moral Hazard

The phrase moral hazard is now being used in the discussion of the Financial Disaster of 2008.

The moral hazard is that if you bailout a bank that created its own problems, what is to prevent it from doing the same thing again.

This leads to a similar problem in contracting called "implied consent". If you fail to warn a company of the first infraction of the contract, there is an implied consent that the infraction provision of the contract was not important and can not be used for breach of contract later on.

By bailing out or infusing capital into banks the government has crossed over into socialism.

Moral Hazard is the problem with socialism. If you give health care/welfare to a person that created their own problems, what is to prevent them from doing the same thing again.

The reality is that when you do offer health care/welfare or bailouts, you are giving implied consent to the evil that was being done to create the problems.

In the economic world Moral Hazard was killed by saying that the economy would die if the bailout was not done.

In the social world Moral Hazard is killed by saying the person will die if the heath care/welfare in not provided.

There is no good thing (cure) that can be done after sin has been begun, just bad choices.

By following Christian Principles the sin can be prevented, but that requires accepting Jesus Christ as Lord/Savior and committing to following the commandments/doctrines of the Bible.