QOTD:  Quote of the Day

“Markets are not properly pricing risk, because they really don’t have to. They have assumed that the U.S. government will not allow them to implode, and that assumption is putting the world economy at stake.” – Kyla Scanlon,  NY Times

“Moral hazard” is a concept in economics and insurance referring to a situation in which an individual or institution takes on greater risk because the negative consequences of that risk are partially or fully borne by others. This shift in behavior arises when protection—such as insurance coverage, government guarantees, or bailouts—reduces the incentive to act cautiously, thereby distorting decision-making and potentially leading to inefficient or reckless outcomes