Free markets under attack
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Free markets under attack

The response of private-sector financial institutions, central banks, regulators and governments to the murderous attacks on New York and Washington has been one of remarkable resilience and impressive solidarity. Governments have forged their diplomatic coalition against terrorists, central banks have coordinated injections of liquidity and interest rate cuts to prevent systemic crisis, regulators have been flexible enough to relax - temporarily - certain capital standards, banks have lent each other space and carefully rebooted the financial markets.

The danger now is that governments may be tempted to extend the extraordinary war-time powers they are granting themselves into an unwarranted and counterproductive degree of intervention in free markets.

The bankers who briefly cooperated so closely in the aftermath of the attacks did so out of pure and simple self-interest. They all make their living from a financial system that had been attacked. They all rallied to help fix it so they could go back to making money again as quickly as possible. They're now happy to be beating the living daylights out of each other in the markets once more. And that's as it should be.

The most unhelpful thing now would be for governments to throw sand in the works.

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