The real estate bubble was made more dangerous to the larger society by bankers who borrowed money (they were highly leveraged) to buy bundled mortgages, even though they knew that the bubble would burst and they risked loosing their (and their investors' and depositors') money.
Some people within the system objected that this strategy was inherently risky, and heard the reply, "Oh, we'll just get the government to bail us out when it all collapses".
We should NOT bail out those who disregard moral hazard in their actions in pursuit of personal gain.
To do so makes future calamities more likely and probably more severe.
We should allow those who gambled on a government bailout to take the brunt of the losses that the collapse of the bubble now produces for them.
The financial institutions and investors in the future will be less likely to repeat such behavior when they are forced to learn by "hard knocks", so to speak.
A bailout teaches that such behavior will be profitable in the future: The upside of the business cycle is "capitalism", with individuals reaping the rewards. But society at large pays the consequences on the downside.
That is just not fair.
John Champagne
A cure for what ails the planet
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