Banking on Bailouts

John Plender looks at the concept of "moral hazard" -- the idea that providing a safety net for the banking system during times of financial crisis will only encourage more risk taking later on.

John Plender looks at the concept of "moral hazard" -- the idea that providing a safety net for the banking system during times of financial crisis will only encourage more risk taking later on. The concept seems fairly sound, but the way it works on financial markets is more complex than people imagine, he writes. "Because so many holders of bank liabilities expect to be bailed out, they do not do enough homework on risk. That lack of discipline is then compounded by excessive reliance on all too fallible rating agencies. And because creditors underprice the risk taking of institutions that are too big or too interconnected to fail, systemically important outfits enjoy a lower cost of funds than they should."

Why the White House Correspondents’ Association dinner won’t feature a comedian in 2019

It's the first time the association hasn't hired a comedian in 16 years.

(Photo by Anna Webber/Getty Images for Vulture Festival)
Culture & Religion
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How to split the USA into two countries: Red and Blue

Progressive America would be half as big, but twice as populated as its conservative twin.

Image: Dicken Schrader
Strange Maps
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  • Perhaps the best way to stop the infighting is to go for a divorce and give the two nations a country each
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A study on flies may hold the key to future addiction treatments.

Scott Barbour/Getty Images
Mind & Brain
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