Bias again

Matthew Continetti has an interesting post up in the Weekly Standard saying that Palin can be the new standard-bearer for American populism, following in the tradition of Jackson, Bryan, and Reagan. The piece is poorly argued from start to finish, but his arguments on the financial system are scarily weak.

For the banks, a complicated and technocratic regulatory scheme isn't necessary. A few simple rules that separate the solvent banks from the insolvent would suffice.

And what happens when a bank becomes insolvent, a la Lehman? He doesn't really say, although earlier in the piece he says:

Held to the standards of the marketplace, companies like GM, Chrysler, AIG, GMAC, and Citi probably would disappear. They'd be bought and sold, carved up into little pieces, and the overpaid CEOs who made bad bets would lose their jobs.

So I imagine that he thinks that if Citi were to become insolvent (or admit that it is insolvent, depending on your point of view), it would simply be broken into little pieces and sold off. There would be no major systemic collapse, because... well, Continetti isn't very clear why not. I suppose that if your biases tell you that government intervention makes things worse, then all problems can be fixed by less government intervention. Even if almost anyone who has studied the financial system disagrees with you.