Friday, August 10, 2007

Fearlessly Fearing Fear

Not a pretty day on Wall Street this week…and no European Vacation for investors, Thursday, either. European shares are finishing Friday with a second straight session aversely affected by credit fears.

The fractional sub-prime mortgage market that everyone pooh-poohed as much ado about nothing has managed to take on Tsunami-like proportions around the world. International investors have jettisoned shares of Deutsche Bank, AXA and hedge fund manager Man Group.

Have we gone from irrational exuberance a few years ago, to irrational paranoia? Or is there still another show to drop in the credit markets—could the financiers be aware of something gone horribly wrong that hasn’t come out, yet?

I loved this line in a story on “Economists at UBS insisted there's not a credit crunch -- money is available, just at a high price.” Methinks they’re toying with reality…

There’s not a shortage of gasoline…it’s available, if you’re willing to pay $3.00/gal at the pump.

There’s not a shortage of Crude Oil…there’s plenty if you’re willing to drill deep enough, or pay $72/bbl for it.

There’s not a shortage of heart, liver, lung or kidney transplants, if you’re on the list: You just have to outlive everyone else to get yours. (Wow—what a novel approach for a new Reality TV Show: Organ Donor Survivor. Adds new meaning to the tag line, “Out-wit, Out-last, Out-live.”)

The Fed is now making noises about holding an emergency, inter-meeting conclave, possibly to lower rates. That might be the worst thing to happen, because it would simply validate the paranoia that’s been festering for the past few weeks.

I don’t profess to have all the answers, but I do know the worst thing about fear is fear itself. Would you rather work through a situation that’s fraught with doubt, but tinged with hope…or try to manage a situation that’s confirmed to be dire by the hopeless?

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