The Irony of 'Moral Hazard'
'Moral Hazard' is an issue of tough market reality, not abstract morality
Under the present circumstances the issue of 'Moral Hazard', which was recently raised by the Governor of the Bank of England, is a much more important issue than some people have realized. If financial institutions are not allowed to fail then poor practices can become increasingly widespread.
In addition, if the government moves to save those institutions, which it must; then ironically, it will ultimately be punished by the market which is essentially made up of those same institutions.