Bernanke put: Don’t feed the beast

Ben Bernanke may soon have an opportunity to abolish the «Greenspan put». The chairman of the US Federal Reserve Board should seize it. The moral hazard caused by the certainty that the Fed will come to the rescue of reckless investors is much more dangerous than the pain of financial troubles. Investors don’t believe that Bernanke will be tough. On the contrary, the market is once again pricing in an interest rate cut before the end of 2007. That is a reversal from June, before credit markets ...