With high levels of municipal debt reverberating around the country, Alex Pollack provides this timely post on the what happened when New York City couldn’t find any buyers for its municipal bonds back in 1975.

As Pollack explains, despite dire warnings of disaster from the financial pundits of the day, the Ford Administration declined to have the federal government bail-out New York City from its bond default. After NYC defaulted, disaster did not occur and the world financial system did not collapse.

Does that fear-mongering remind you of anything that occurred more recently?

Remember, this really is not rocket science.