Key insights
- The author argues that the market's apparent disconnect from geopolitical risks and other potential negative catalysts stems from an expectation of future government bailouts. This creates a moral hazard, where investors are incentivized to disregard risks, believing that any significant downturn will be mitigated by government intervention. This expectation could lead to increased market fragility and a potentially sharper correction if the perceived safety net fails.
A gift article from the NYTimes Opinion page. Many of us have been asking this question and this is one person's answer. The author primarily covers the events that likely should affect the market more than they have and why the market may be overlooking these events because it fully expects any disaster to be handled by a future government bailout.