Endless Moral Hazard

Digby notes:

I don't have money so it doesn't really matter to me except in the big macro-economic sense that it worries any citizen. But if I had some serious money in the markets, I'd be worried about this too:

I think the reaction to the Lehman scandal (not particularly strong generally) is very telling. The investor class should, much more than me, care that a major company was engaged in accounting fraud and should worry, much more than me, that other companies are doing the same. That they aren't says a lot about how the game really works.

I realize that "market psychology" is important and that much of the market's success or failure is based on tinkerbell logic, but this is ridiculous. At some point the numbers do matter. When these people commit fraud the whole thing falls apart no matter how loudly you clap. I would think that the people with real money would want the market to be honest, but I guess they all think they are smarter than everyone else and won't be among the losers. Faith-based.

What they really believe in is that Obama and Congress will bail them out again.  That's the only thing that matters.  If they don't, America ceases to exist overnight.  They have us by the balls and will continue to do so until we demand the game ends.

Right now we live in a time of endless moral hazard.  The banks will continue to gamble with trillions. Congress refuses to stop them.  It really will take another economic collapse event before they'll act.  Because by then, well, the pitchforks really will be out.

Literally.