Goel discusses an issue that has been argued already in the the pages of the FT, Economist, and NYTimes to name a few. The argument for Fed intervention, moral hazard not-withstanding, is that letting Bear Sterns collapse would have taken a large chunk of a very network financial system with them. This could have caused a panic, which could have led to much deeper economic problems than what the nation faces today.

The rhetoric is inflammatory, aimed at short-term Federal Reserve actions, with a recap of recent events surrounding Bear Stearns' takeover by JPMorgan. I find the analysis sensible, with yet another "bubble" sending exorbitant profits to the top, then when it bursts, come yells of "bailout or we'll take you down to Hooverville". The article is limited in scope. What could be a serious meltdown of our, and possibly the global, economy deserves in depth treatment. The developments since about 2000 have put investments on a global scale, with woefully inadequate controls and regulation. This has created fear of all investments, since even AAA rated bonds could be worthless paper, and no investment firm knows how much of their ... More »