There are a thousand theories about why American markets are in such turmoil, and ten times as many about what we need to do. Here's one of the craziest.
Some economists and many conservative pundits say we should let financial giants fail, because if we save them, future executives will feel safe with even more risky behavior.
This so-called 'moral hazard' is a principle of economics that applies in some cases, but it's awfully hard to see it here. Let's see what's happened to the wealth of these executives as their firms prepare for bailout.
Stock value for CEO's of rescued firms ($ millions)
|CEO||Firm||2007 value||Last Friday|
|Sullivan||AIG (ex-CEO)||3|| 0.1|
|O'Neal||Merrill (ex)||128|| 40|
|Mudd||Fannie Mae||26|| 0.4|
|Syron||Freddie Mac||11|| 0.1|