To Solve This Crisis, Just Take a Deep Breath and Calm Down
Things are evolving so quickly in the Eurozone that I’m sure this will be out of date as soon as I write it. Or maybe not. This is more a general thought about the crisis than a particular focus on one part.
Business cycles: Fearing fear itself | The Economist
Business cycles: Fearing fear itself | The Economist.
More confirmation that what we’re seeing now is self-perpetuating market fear of events that threatens to create self-fulfilling prophecies. At least on the upside, there is plenty of precedence for this type of thing, and evidence that any pain it causes is relatively short term. I’m personally hoping that today’s rally lasts and that we see a bit of return to sanity before we cause a short recession. Also, I hope against hope that investors calm the hell down about Europe and realize that their actions influence government fiscal policy tremendously. If they calm down and keep a level head, collectively-speaking, the Eurozone should be able to ride things out, and Italy and Spain should be able to service their debts in perpetuity.
