This helped: Three Things To Read About Greece .
• “For the record, my sophisticated hard-working elite European
interlocutors, the term moral hazard
traditionally applies to creditors. It describes the
hazard to the real economy that might result if investors
fail to discriminate between valuable and not-so-valuable projects
when they allocate society’s scarce resources as proxied by money
claims. Lending to a corrupt, clientelist Greek state that
squanders resources on activities unlikely to yield growth from
which the debt could be serviced? That is precisely, exactly, what
the term ‘moral hazard’ exists to discourage. You did that. Yes,
the Greek state was an unworthy and sometimes unscrupulous debtor.
Newsflash: The world is full of unworthy and unscrupulous entities
willing to take your money and call the transaction a ‘loan’. It
always will be. That is why responsibility for, and the
consequences of, extending credit badly must fall upon creditors,
not debtors. There is one morality tale that says the debtor
must repay, or she has sinned and must be punished. There is
another morality tale that says the creditor must invest wisely, or
she has stewarded resources poorly and must be punished. We get to
choose which morality tale we most use to make sense of the world.
We do, and surely should, use both to some degree. But if we
emphasize the first story, we end up in a world full of bad loans,
wasted resources, and people trapped in debtors’ prison,
metaphorical or literal. If we emphasize the second story, we end
up in a world where dumb expenditures are never financed in the
first place.”
Three Things To Read About Greece [Alex Balk/The Awl]
