Aren't rich people good for anything?

Felix Salmon asked:

More generally, you need liquidity to profit from a liquidity event.  If illiquid paper plunges in price, you can buy it up (with cash), hold it to maturity, and make a tidy sum.  But where's that cash going to come from?  That's the question.

I am glad to see this in the new Portfolio magazine finance blog.  Felix is always interesting, here is his post on whether we are facing a liquidity or insolvency crisis.