Belmont Club

Fear

The characteristic of a collapsing system is faults that go unnoticed in fair weather start showing up in the storm. Megan McArdle in the Atlantic talks about the emergence of another possible European domino — Belgium.  The WSJ reports the Dow Jones plunged 300 points as “investors appeared to lose faith in the ability of the world’s policy makers to revive the global economy and stave off a rolling debt crisis in Europe.”

“This is a fear-driven market. We’re in a mini-free fall. It’s not a Black Monday, or Black Thursday, but it’s in pretty bad shape–all the big stocks are being liquidated,” said Christian Thwaites, president and chief executive at Sentinel Investments. …

Underscoring that worried investors are increasingly seeking cold cash, the Bank of New York Mellon Corp. (BK) is preparing to charge some large depositors to hold their funds. The biggest U.S. custodial bank said this week in a note to clients that it will begin slapping a fee next week on customers who have vastly increased their deposit balances over the past month.

The bank cited the massive dollar deposits it has received over recent weeks, as investors and corporations retreat from financial markets amid Europe’s debt crisis and the recent debate over U.S. government borrowing. … “You’ve got a weak economy, the aversion of a debt crisis but not a solution, and you’ve got the rest of the globe starting to implode in a lot of areas, especially Europe,” said Barry James, president and chief executive of the James Advantage Funds. “It’s natural that people would react with fear.”

And that fear will grow. The odds are that in the coming days and weeks what seemed solid and immutable will be shown to have feet of clay.

Fear can be a good or bad thing. It can be helpful or dangerous; which it turns out to be depends primarily on leadership. Fear creates a sense of urgency which if properly channeled, can expedite a solution to a problem. It also creates conditions which if harnessed improperly or malevolently, can run whole civilizations off a cliff. For fear is not the worst thing that can overtake a system. It has an evil twin called Panic.

When a faith in a system collapses, its critics often assume the stature of sages; whereas in reality they only happened to know that the system was failing. Nevertheless, the confused tend to rally around the banners of Cassandra on the principle that if they were right once, they might be again.

A previous Belmont Club post made the argument that critics of the Tea Party mistakenly saw them for a rabble because they saw them in relationship to a system in which the majority still reposed confidence. They had to see the Tea party, instead, with eyes that could look into the future, when all the establishment’s flags were fleeing. Then they would not be a pitiful rabble. They would be all that remained standing.

But critics are rarely right about everything. The best of them — and I think of Corazon Aquino — understand that they are transitional figures who happened to have one great gift, of which they must give to the fullest before they depart. They understand their purpose is to hold the ring while a confused society regroups and reforms. Sometimes I think George Washington understood that about himself.

The actual resignation of his command, having made peace between the civil and military powers of the new country — and, in an emotional ceremony, bidden farewell to his officers on December 4, 1783 — took place in Annapolis, Maryland, on December 23, when he formally handed back to Congress his commission as commander in chief, which they had given him in June 1775. He said he would never again hold public office. He had his horse waiting at the door, and he took the road to Mount Vernon the next day.

No one who knew Washington was surprised. Everyone else, in varying degrees, was astonished at this singular failure of the corruption of power to work. And, indeed, it was a rare moment in history. In London, George III questioned the American-born painter Benjamin West what Washington would do now he had won the war. “Oh,” said West, “they say he will return to his farm.” “If he does that,” said the king, “he will be the greatest man in the world.”

The current crop of politicians have had many chances to be celebrities; many opportunities to be the big man on the block. Now some of them — let us see whose destiny it is  and whose character measures up — have a chance at something else. Greatness is a terrible and bitter cup at the bottom of which is inscribed these words: ‘no guts, no glory’.

Here is Nigel Farage, the head of the UK Independence Party, stating the obvious on Nov 26, 2010. But as President Obama said on the occasion of his birthday, “we’re not even halfway there yet … we don’t have time to play these partisan games. … rebuilding Chicago … rebuilding Detroit … I want to build electric cars in America and ship them all around the world”. Whether he meant it as parody or genuinely imagined he was bestriding the world is up to the reader to decide.

But if we’re not halfway there yet, what does the bottom look like?

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