Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Moral hazard is the possibility that a company or person who knows or expects that any losses they incur will be covered by the government - or some entity, but here we're talking about the government. And when they expect that, this will motivate them to actually take more chances, actually engage in more risky behavior. So for example, what if you knew that if you invested in the stock market and you invested in some risky stocks and it turns out right, you'll make a bunch of money. But if you lose money, the government will come in and bail you out. Well, you'll probably be motivated to invest more of your money in risky stocks because it's all an upside game for you. So the application here, I think, is - obviously very clear - to what's happening in the financial markets. Many in the banking and financial services sector in recent years thought, I think implicitly, that if they got into problems, the federal government or its agents would come in and help them out, which, of course, it has. And the question is, did that motivate, perhaps, lenders to make more risky loans, more risky home loans, loans to people who, perhaps, didn't have the ability to pay those loans back. So this is a big problem, particularly in the financial area. One way of handling it, and we see this in insurance markets, is to make sure that the person who's being insured does bear some of the downside risk. In insurance, for example, we do this with co-payments and deductibles. And I think many are rethinking this for the broader financial sector, particularly banks. And there are some ideas now to reform those institutions in the future to where downside risks will be shared by those in the financial sector."