Thursday, January 13, 2011
Squirrels: What Blizzard?
The squirrels changed their behaviour because the people feed them in winter. They nurture the animals in the parks or put food before their windows, intending to feed the birds. Squirrels don´t care, they like bird food.Therefore they don´t need to hibernate anymore to survive in winter. More time to live.
Feeding the squirrels in winter compares somewhat to bailing out the banks. Ben Bernanke and other central bankers rescued the big financial institutions in the crises of 2008, otherwise many banks wouldn`t have survived the harsh banking winter.
Critics complain that this leads to moral hazard, a term coined by insurance economists. If someone doesn`t have to deal with his own risks & misbehaviour, because other people (for example the insurance company) bails him out, he doesn`t care about risks. Hence he takes too many risks and misbehaves. Bailing out banks means rewarding them for taking too much risks and guids them to continue their mistakes, say the critics. Therefore the whole economy may suffer, because the banks invest too much in hazardous adventures.
Maybe. But the bailed out squirrels don´t care. They seem to enjoy their new behaviour and bring more life and nature to the streets of Manhattan. It seems also that the banks are flourishing again and with them the whole economy. Time will tell.