can someone explain the fear?, page-5

David, while individuals can remain rational; markets are not rational. They are emotional. That's because people herd together for safety (it's instinctively ingrained in humans after millions of years of survival evolution). The collective mood of the herd dictates trends in society (eg. fashion, art , music, film, politics and economic expansion or contraction etc.) and it's most obvious in financial markets. In fact the stock market is the perfect barometer of social mood.

We are simply experiencing a change in the mood of society. Fundamentals merely rationalize the prevailing mood, until it changes. And when people become more cautious and austere they spend less and they borrow less. The resultant contraction of credit and slowing velocity of money will see econmic contraction - regardless of what the policy makers attempt to do to stimulate (ie. QE, 0% rates or government spending et al).

During such rare and severe natural cycles of human behaviour; governments, regulators and central bankers bedome exposed as impotent (ie. they are merely pushing on a piece of string). For more see ; www.socionomics.net