Economics

Cars for Wall Street

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In an Entertainment Weekly interview, without actually using the phrase "moral hazard," Jon Stewart and Stephen Colbert offer a straightforward, funny explanation of the concept of a moral hazard:

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STEWART: We were in this huge credit crisis, out of money. Then the Fed goes, We'll give you a trillion dollars, and all of a sudden Wall Street is like, "I can't believe we got away with it!" Can you imagine if someone said, "I shouldn't have bought that sports car because it means I can't have my house," and the bank just said, "All right, you can have your house. And you know what? Keep the car." [He throws up his arms joyfully and shouts] "Yeaaaaah, I get to keep the car! Wait, do I have to give the money back?" "No, it doesn't matter." "Yeah, I'm gonna get another car! I'm gonna do the same thing the same way, except twice as f---ed up!"

COLBERT: The idea that Lehman Brothers doesn't get any money and AIG does reminds me very much of "Iran is a mortal enemy because they have not achieved a nuclear weapon. But North Korea is a country we can work with, because they have a nuclear weapon." The idea is, Get big or go home. How big can you f--- up? Can you f--- up so bad that you would ruin the world economy? If it's just 15,000 who are out of jobs, no. You have to actually be a global f---up to get any help.

Also quotable: Stewart on the media's coverage:

We've got three financial networks on all day. The bottom falls out of the credit market, and they were all running around. On CNBC I saw a guy talking to eight people in [eight different onscreen] boxes, and they were all like, "I don't know!" It'd be like if Hurricane Ike hit, and you put on the Weather Channel, and they were yelling, "I don't know what the f--- is going on! I'm getting wet and it's windy and I don't know why and it's making me sad! Maybe the president could come down and put up some sort of windscreen?"