I believe the world is now more frightened about the future, than at any time in my adult life. This weekend I spent several hours reviewing 30 years of magazine covers. Even during the terrible 1972-1974 period–a time of inflation, war, and a vicious bear market, there was some humor mixed in with the dark images. Not now.
In global newspapers, TV, and in crossover mainstream news coverage the number of calls are many for total systemic breakdown and collapse. The credit and banking crisis spans the entire expanse of real estate from dull, local news broadcasts to the most well-written journals and columns. I have watched financial TV segments from Toronto to Sydney, from London to Singapore. Lots of people are talking about the Great Depression, a collapse of global industry, or a 20 year period where global equity indexes stay rangebound under their recent highs. In the peak oil community, there remains the spectre of the double-threat: a no-growth world with stubbornly high oil prices. Even Francis Fukuyama has stepped in–the man who predicted the End of History in 1992–to now declare the Fall of America.
The newly famous are those who both predicted collapse, and, who predict the worst is yet to come. Nouriel Roubini’s fame is almost blinding, at this point. But this year, everyone from Jeremy Grantham to Larry Summers, was predicting a 100 year flood.
Accordingly, I am now confident that massive and widespread global fear is greater than at anytime since the Cold War ended. This eclipses the 1997 Asian Financial Crisis, the 1998 LTCM crisis, the Nasdaq bust, or even going back to the 1987 crash or the 1982 recession. Part of the explanation for the extreme sentiment I think lies in the sense of foreboding and dread that comes with problems in the banking system. The credit crisis is less a particular event. It’s more like a disease, like a cancer. In that sense, the narrative of the story is very different. Global markets have an easier time pricing in War, Terrorism, Political Coups, Assassination, and industrial bankruptcies. Those are all events that tend to end.
The sense that there is trouble–with no end in sight–is maddening and accounts for the images of acute uncertainty we see today.
-Gregor
