CNN has an article on the mess that Bear Stearns has Found themselves^*.

They go into a number of reasons, but at its core, Bear Stearns^*, and the rest of Wall Street have fallen victim to one of the favorite bogeymen of the right wing, moral hazard.

The right wing insists that things like minimum wage laws make us lazy, and public health care delivery makes us hypochondriacs.

While it is certain that minimum wage laws raise the cost of low value employees, and that there would be more use of the healthcare system if it were sane, the most extreme case illustrating the risks moral hazard is in the financial markets.

It turns out that Alan “Bubbles” Greenspan did the same with financial markets: There was never a market failure that he would not bail out over the past. As a result, people have become far more accepting of risk in the pursuit of greater return.

Whether it be the bailout of LTCM, or the floodgates being opened after the crash of 1987, or the dotbombs, Alan Greenspan has insulated people from the consequences of their decisions, and so we have people loaning dogs money to buy a house.

FWIW, I do not think that this serves as a good argument against socialized healthcare, which I support (I support a NHS over a single payer), but it is a good argument against socialized capitalism.

^*Just to remind you, I have predicted that Bear Stearns cease to exist as an independent entity sometime before August 2, 2008.