Fear Cycle

Use the following earmarks to identify fear cycles:

The news is bad. It seems as if everything is wrong. The headlines feature stories about society’s ills and how the current financial mess worsened them. You see interviews with people who have lost everything and with public servants who are at wits’ end trying to figure out how to help the rising numbers who are in trouble. Companies that you’ve never heard of, such as mortgage counseling firms, are doing booming business.

Public opinion is uniformly negative. In 2008, at the bottom of the stock market’s decline in March, the majority of Americans polled said that the market was heading in the wrong direction, and consumer confidence had fallen to record low levels.

Politicians scramble to appear to be helpful. You see all kinds of bills being debated in Congress aimed at fixing the problem and a lot of money being pumped into the economy. In 2008, tax rebate checks were mailed to taxpayers so that they could spend money and “revive” the economy. The House and Senate, along with the president, put forth multiple initiatives in order to prop up the housing market. And chief executives of Wall Street investment banks and mortgage lenders were paraded and berated before Congress.