Fear irradiated the markets today , and it could get ugly in coming days. The CDS market and money markets are vulnerable. European banks got renewed funding from the ECB this morning, but look unsteady.
And of course it is not a matter of market psychology alone. There are serious fiscal problems in all the major developed countries that have been building up for years - indeed deeper problems with the entire social model. Europe as we know it could crack open.
I can already see the press tonight is full of speculation about a double dip recession in the US. A lot more people could lose their jobs or their businesses or their homes, and that is terrible.
But maybe we also need to look beyond the business cycle as well. Beyond prospects for next quarter.
So much analytical attention will be devoted to tomorrow's non-farm payrolls number, so much focus on prospects or GDP in the next year... But where are we going beyond that? How do we make economic change work for us, rather than live from crisis to crisis? It seems we have been doing that for twenty years or more, and this at a time when central bankers talked about 'the great moderation.' Asia, Russia, LTCM, dot.com, 9/11, Enron, housing, Bear, Lehman.
The real questions are ultimately about how people live, not their portfolio balances.
So often we think of money or wealth as a store of options, of choices, rather than simply deferred material goods or possessions or comfort. The choice itself, the independence to choose is what we want. That is in large measure freedom. But it also a tether that leaves us exposed when the markets plunge. Then it is not so much choice, as vulnerability.
Today's market action is major news, but also static and noise in medium-term perspective. And in the longer run we all forget what the Dow was at on a particular day.
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