Imagination

Over in (non-Soviet) Russia, trading was suspended yesterday after markets tumbled 17%. Some Russian reportedly said:

“It is a situation of total mistrust. The liquidity crisis is being caused by a crisis of confidence in which people are frightened to borrow and frightened to lend.”

I suspect this is the kind of stuff Hank Paulson and Ben Bernanke are trying to avoid with their interventions.

I understand the desire among many of my peers to complain about the taxpayer being forced to foot the bill for these sorts of things. I just suggest that, with a little imagination, one can easily conceive of a whole set of even worse outcomes if this situation is not carefully tended to.