Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions. (wikipedia)

I was chatting with Scott Rafer this morning and his observation was, we are not in a cycle, this is a sea change. Everything has changed, and we all need to realize that. It’s not going back to the way it was. Not only in the online advertising world that is my day job, but everywhere ->

There are very few riskless islands in business and life anymore; everything has a profound degree of connection to many other things. Every risk- and leveraged action banks and investors have taken on has a consequence as we have seen, and will unfortunately continue to see. One of the things I’ve started to think a LOT about is the incentives that  each person and company I deal with has in any given context. While we are all connected, we each have a slightly different frame of reference and that shapes how we react to situations.

The point of this ramble – beware of things that look too good to be true. The costs will get parceled out eventually; and the timing and magnitude of that is what might really hurt.