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While I believe this article is a fascinating look at the bureaucracy at JPL, it is analogous to the mortgage crisis only in that it is an example of perverse incentives. Perverse incentives exist all around us, so I don't find this example particularly enlightening.

Some other examples of perverse incentives in systems: http://en.wikipedia.org/wiki/Perverse_incentive

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http://en.wikipedia.org/wiki/Parable_of_the_broken_window

Right, in the economic case, the perverse incentives were created by the market. The bailouts are only meant to stop the failure of our economy as a whole. That sort of failure must never be an option.

not created by the market. banks took these high risk loans knowing they could sell them to fannie-mae and freddie-mac, who in turn knew they would not be allowed to fail.

Actually, weren't lending institutions required to loan so much to high-risk borrowers as a way to make sure more people had homes? Seems like I heard this was a requirement if the institution wanted to open new offices.

The loans themselves are only a tiny fraction of the problem. It's more the credit default swaps and other forms of gambling tied to the loans.

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