The staff at Minyanville posted a thought provoking article entitled “Never Bet Against the House,” in which the author discusses some of the consequences and unintended effects of the increasing willingness by the government to “bail out” risk-seeking investors.

In the opinion piece, Malcolm states:

“Not only have risky investments been deliberately supported by government policy, but less risky paths have been infected by overspill from the risk-taking activities; worse yet, my very own government is treating me as a sucker. I mean openly, which is kind of new.”

“The increasing role of federal intervention in stimulating certain segments of the economy and bailing out risk-takers has made it increasingly clear that the choice to be a conservative investor was not only foolish, but is being deliberately singled out for punishment by our own government.”

Furthermore,

“The net effect of these bailout activities is to reward the people who took wild risk and ignored generations of wisdom about debt and gambling.”

Read the entire piece for complete insights.  It really makes you wonder, especially to the traders who continuously refer to the “Plunge Protection Team” which always seems to sweep in and save the market at its absolute worst moment.

What will be the consequences in such policy when many investors ‘catch on’ that their risks will be rewarded in the end?

And what will happen when a new administration or a new policy is adopted that is more akin to the ‘old way’ of thinking?

It’s worth a few minutes of your time to ponder such possibilities.