Now Taking Applications for the Next Rescue

The New York Times has the must read ahead of the curve piece today, "Who Else Can Pile On for a Federal Rescue?" that examines the debate that is likely to end up in the halls of Congress and hopefully on the campaign trail. BUT, the debate isn't exactly what you think. If you thought it was about whether some other financial entity should get a rescue you would be only partially correct... It is really about the "moral hazard" argument which essentially means if you help one company in distress then others will continue their own ill advised behavior assuming they'll get help too. The question becomes does helping a company in one industry make companies in OTHER industries assume they'll get bailed out too? How far does the "moral hazard" argument spread?

Here's why you care: The debate asks what standard should be set. Should it be too big to fail? If that's the case then what about automakers, airlines, pharmaceutical companies? Airlines and car makers can claim an economic impact due to massive job loss, and drug companies could claim the loss of important research and so on... Or should it be focused on financial related industries that can claim if they drown they'll take everyone with us? Those are important questions. But someone is going to pay, and that person is you.