Radio Australia Today Editorial

Financial crisis. Less fear, more smiles

23 December 2009

Did you see that report out of the U.S. that suggests that people are less scared about the financial crisis than they have been since it started last year?.

This wasn’t just a survey of people at the local mall. It is actually a long-standing index of fear. The CBOE volatility index, which our wire services say is Wall Street’s favorite measure of investor fear. It fell nearly 5%, closing below the critical level of 20 for the first time since this crisis started.

The U.S. is out of recession and that would certainly have something to do with it. Maybe it’s the natural cheer brought on by Christmas. Maybe it was the awarding of the Time Person of the Year to the Fed Reserve Chair Ben Benanke.

Probably it has more to do with the fact that the markets are heading up; companies are coming out of bankruptcy protection, and people are getting enough dosh in their pockets to buy things like cars.

It just highlights to me how fear can turn on a dime. Markets go down, people get scared. Nothing much actually happened as such, but a few cattle sniffed the wind and charged away from the market. Other cattle saw the rush and joined the herd, srtamping over the delicate buds on the way. As Pulitzer Prize winning economic writer David Wessel told me this morning, it made no sense, and you should’nt go beating yourself trying to find any.

If fear has gone down in the U.S., it would be rather higher in the U.K. As of today Britain is the only advanced economy still in recession. Combine this with the heavy weather and snowstorms that have shut down transport to Wales and Scotland, then we have the threat of the British Airways strike and the jamming of the Channel Tunnel rail link this week.

Actually, the Brits would probably feeling more angry than scared.

Perhaps that would be a good index. An Angry Index. Maybe then a Disappointed Index (good for supporters of losing World Cup sides); a Sad Index; or, if you are a satisfied sort: A Content Index.

A Perplexed Index would be the one that would score the highest, I think. It would catch all the people who have undoubtedly wondered how we got ourselves into the financial turmoil of the last 14 months in the first place.

- Phil Kafcaloudes