Trust In Markets

City Journal:

While it’s true, as the president says, that America’s stock of physical and human capital remains undiminished, something important was indeed destroyed last year: trust.

As trust declines, so does Americans’ willingness to invest their money in the financial system. Our data show that trust in the stock market affects people’s intention to buy stocks, even after accounting for expectations of future stock-market performance. Similarly, a person’s trust in banks predicts the likelihood that he will make a run on his bank in a moment of crisis: 25 percent of those who don’t trust banks withdrew their deposits and stored them as cash last fall, compared with only 3 percent of those who said they still trusted the banks. Thus, trust in financial institutions is a key factor for the smooth functioning of capital markets and, by extension, the economy. Changes in trust matter.

For all intents and purposes trust and fear are opposites in financial and economic terms. What this is saying is that people are scared. However, I disagree with the article's villain:

But the main cause of the drop in trust is people’s beliefs about the type of government intervention during the crisis.

This is Stop-When-You-Get-To-It logic.

I'd imagine...wait..let's all imagine a zombie apocalypse. Now, imagine a poll of the survivors was taken. How many people would say the government's response was the problem? Probably all because there was a fucking zombie apocalypse that wasn't stopped. So, one could argue that the proximate responsibility and blame rested with the government to stop the zombie apocalypse because stopping shit like that is their thing. Yet, the root cause obviously rests with whomever created the retrovirus that launched the zombie apocalypse, which as we all know was some evil corporation that was trying to create an army of super soldiers. In case you are lost, blaming the trust problem on the government is like blaming the government for a zombie apocalypse that it didn't create. Sure, it didn't stop it, but it didn't create it either. Therefore, it's dumb, stupid Stop-When-You-Get-To-It logic to say that since the government didn't stop the crisis that made everybody afraid the government's response is entirely the reason everybody is afraid.