potlighting ciphers is a bad idea. Ciphers are divas. They work hard to please. When attention flags, they dive again.
Here’s the thing:
Stock markets are made from banks and companies; banks and companies are made from people; people belong to a herd. They invest in the whole when others do the same. It’s collective gambling to sweeten an interconnected pot. When the whole breaks apart, risk is foolish. Investors pack up and flee. Or hunker down.
It’s primordial, visceral, anything but magical: No gambling, no economy.
The ongoing financial crisis copy-cats September 11 while stemming from a different source. It feeds on pessimism to metastasize. Institutional bad news, already very real, cannibalizes itself for further energy — much the way AIDS and cancer devour hosts.
Seven years ago the bad news source was all about personal and national security. All was under threat. Alerts followed. Anxiety proliferated. Wars were waged. Menacing scenarios constructed from irrationally assembled facts were peddled methodically. An attack to end all attacks was imminent.
Yet we’re still here, rattled but still sober. It’s now clear that September 11 was a history-making aberration. Terrible but unique, even to its (amazed) creators. Its less pleasant consequences have since vied with the event itself for primacy.
Fear is the world’s most rampant emotion, envy and empathy excluded.
Franklin D. Roosevelt’s 1933 inaugural address recognized its Depression paw prints and responded fiercely: “Let me assert my firm belief that the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
He attacked the Depression’s feral side.
Retreat, which is punch-drunk, compels public attention more than advance, which reflects sobriety. Scribes comb bad tidings for defeat. The unraveling becomes addictive. FDR used rhetoric and authority to reduce panic’s oxygen flow. “We are stricken by no plague of locusts,” he said.
The panic of 2008, absent breaking mechanisms, has so far made a meal of its plague. End-of-the-world coverage of stupendous stock market declines in mid- to late-September produced a self-fulfilling aftermath. October, said one economist, “was like turning a switch. Everything pretty much shut down.”
Predictably so. President Bush punched in his own brand of incendiary folklore — “If money isn’t loosened up, this sucker could go down.” There’s hell to pay when a wealthy Republican president jabbers apocalyptically.
What consumer enters a mansion whose rooms are under threat of arson? Major financial crises are a fleeing mob. The mob must be talked back into the city. Why they left is second to telling them that the sun will shine again.
So far, though, morbidity has prevailed. Leaders are in calamity’s thrall, as if awed by its catharsis. (“You have to realize, we live for this. We live for these kinds of crises,” Treasure Secretary nominee Timothy Geithner tellingly explained to a friend last summer.)
President-elect Barrack Obama has so far been cautious, perhaps awaiting his own FDR turn in January: “It is not going to be quick and it is not going to be easy for us to dig ourselves out of the hole that we are in, but America is a strong and resilient country.” (He then proposed a very FDR-like public works plan.)
For now, holes resound more than resilience.
As a result, the playing field belongs to nameless, unreasoning, unjustified terror. Indices dip because nothing stops them. Their own awfulness eggs on reverse momentum.
Upside down cheerleading scrapes its own bottom. “We think it’s going to continue to go lower,” Ryan Detrick of Schaeffer’s Investment Research told The New York Times of Wall Street. “We don’t think people are scared enough. They’re just not showing enough fear. People are numb to this, they’re almost immune to it.”
Skyscrapers toppled, the new bottom has no baseline.
The BBC interviewed Miles Remington, a Hong Kong stock market trader. “People are looking for any kind of positive,” he said, “and there are just no positives out there.”
But people themselves are the positives. They frame the trust that markets thrive on. Investment is a public act that depends on optimism. Subtract optimism and the lattice breaks. Broadcast doom and gloom, with numbers as proof, and you reap your own whirlwind.
FDR artificially created jobs to slow the downturn. But it was World War II’s industrial energy that restored America’s lapsed economy landscape. The Great Depression indirectly cost 250,000 lives.
War is no longer an option. Even bailouts are dubious. The mob must be wooed back gradually, with treats and petting and reassurances. The industrialized world has no wish to discard the perks of affluence, greater or lesser depending on the nation. At the same time it’s mesmerized by the house on fire, its own.
A 1933 speech is lost on 2008’s inclement weather. But there’s much to be learned from FDR rhetorical forerunner to “the buck stops here,” immortalized by Harry Truman. The buck needs to stop somewhere, and fast. Otherwise all bucks will make themselves scarcer still.