The duke of moral hazard

Another masterstroke by the tactical genius of monetary policy, or a desperate effort to stop a 50% slide in the Nasdaq from becoming a freefall? It's tough to question Federal Reserve Chairman Alan Greenspan's abilities in managing the world's biggest economy. But it's similarly hard to ignore the worry that last week's surprise Fed rate cut is an example of what economists call moral hazard. That's the idea that taking big financial risks is safe because central banks will bail out investors if things go awry, and that the perceived existence of that safety net encourages risky behaviour...