Moral Hazard and the Fed

Jacob Moore: You know what moral hazard is, Ma? You know what that means?
Sylvia Moore: No.
Jacob Moore: It means that once you get bailed out, what's to stop you from taking another shot.
--Wall Street: Money Never Sleeps

Jim Cramer touches on the key reason behind the stock market's huge move off the late December lows. Market participants know that they have the Fed watching their backs.

This creates a classic moral hazard--one that will end in tears at some point.

But right now the Fed is telling investors to buy 'em, and they're doing just that.