Another Good Op-Ed from Bruce Bartlett

Sat, 27 Sep 2008 19:35:53 +0000

In The New York Post today, Bruce Bartlett makes the case for why trouble in the financial sector merits federal intervention, relying on the particular nature of financial institutions:

The basic problem is that the financial sector faces systemic risk in a way that no other industry does: By its nature, it is a house of cards that can collapse at a moment's notice.

[...]

What prevents this house of cards from falling is confidence: People don't feel compelled to hold all their money in cash under their mattress and the system functions smoothly.

But, should confidence be shaken, the risks are very great indeed.

This is a good article to e-mail your less financially savvy friends to help explain the mess to them.