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Is morality a casualty of the financial crisis?

Ian Brimacombe Ian Brimacombe | 10:22 UK time, Tuesday, 11 May 2010


Hi, Ian here from the World Update programme.

One of the phrases we've heard a lot throughout the financial crisis is moral hazard.

This is the idea that people protected from risk behave differently than they would if they were fully exposed to the risk.

The term has come up again following Europe's trillion dollar support package for ailing Eurozone economies.

Peter Boone and Simon Johnson wrote on the influential economics blog, The baseline scenario,

"This is a whole new level of global moral hazard - the result of an alliance of convenience between troubled governments in the south of Europe and the north European banks who enabled their debt habit."

And Terence Roth of the Wall Street journal said,

"The flirtation with moral hazard expands to rewarding fiscal free-spenders with financial bailouts. The process is taking the community further down the road of moral hazard, rewarding transgressors by retroactively rewriting the rules."

Today the Pope is in Portugal, one of the most indebted countries in Europe. He is expected to tell people they should uphold Christian values and seek solace in their faith as the financial squeeze carries on.

But, do you think their European leaders have been setting a good example? Do you agree that those who have acted recklessly have been rewarded for their actions? Or were policy makers right to restore confidence, even if it meant they didn't necessarily take the moral high-ground?

Also - does religious teaching have a role in restoring morality to finances, as the Pope says is should?

We'll be exploring the issue today on World Update.

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