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  1. #1
    Darkside Medic Senior Member rory_20_uk's Avatar
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    Default Re: The continuing battle against the inevitable Euro area default

    Voting populations are like children.

    Who would they prefer? The parent who gives them small toys but promises them that tomorrow is going to be taken care of, or the one who gets them really big toys using loans... and also tells them that tomorrow is going to be taken care of.

    In the UK there was a flood in the North. Some had house insurance that covered floods, others didn't. Those that didn't got give free money from the government. So, either you can pay insurance year after year, or not bother and complain if a flood happens and the Government will give you money.

    In the UK, cuts are being fought tooth and nail as every special interest group fights for their money, with no mature overview that this is required due to the hideous amount of borrowing that went on before. Of course spending less money on things will be worse but frankly that's just tough.

    Gordon Brown epitomised this "spend now, ask questions... never" mentality by calling every handout an "investment" - but never feeling the need to explain what the returns would be.

    Last edited by rory_20_uk; 11-20-2011 at 10:51.
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  2. #2
    Throne Room Caliph Senior Member phonicsmonkey's Avatar
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    Default Re: The continuing battle against the inevitable Euro area default

    Quote Originally Posted by rory_20_uk View Post
    Voting populations are like children.

    Who would they prefer? The parent who gives them small toys but promises them that tomorrow is going to be taken care of, or the one who gets them really big toys using loans... and also tells them that tomorrow is going to be taken care of.

    In the UK there was a flood in the North. Some had house insurance that covered floods, others didn't. Those that didn't got give free money from the government. So, either you can pay insurance year after year, or not bother and complain if a flood happens and the Government will give you money.

    In the UK, cuts are being fought tooth and nail as every special interest group fights for their money, with no mature overview that this is required due to the hideous amount of borrowing that went on before. Of course spending less money on things will be worse but frankly that's just tough.

    Gordon Brown epitomised this "spend now, ask questions... never" mentality by calling every handout an "investment" - but never feeling the need to explain what the returns would be.

    Yes this is called moral hazard.

    In the aftermath of the crisis the Fed and developed world governments in general, in their bailouts, failed to discriminate between those who had been reckless and deserved to go under and those who were simply caught up in the storm and should be saved. Then, in an apparent attempt to deal with the issue of moral hazard, they recklessly allowed Lehman Brothers to fail (alone among the broker-dealers who were in the same mess together) pour l'encouragement des autres and the resulting uncertainty made the whole problem many times worse.

    Now the only clarity is that if you are big enough that your failing will threaten the whole financial system you will not be allowed to fail - a perverse incentive to grow bigger and more dangerous!
    Last edited by phonicsmonkey; 11-20-2011 at 13:41.
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