The Dow Jones Industrial Average fell more than 400 points yesterday, or 3.3 percent. Did you hear? Of course you did. But what was lost amid the hysterical headlines and panic selling — and this is kind of what defines panic selling — was any overarching reason for the sellers to be selling. Was it China? Proximately, yes, because it was Tuesday's 9 percent decline in Shanghai that got the ball rolling. Was it the greater-than-expected drop in U.S. durable-goods orders, a leading indicator for U.S. consumption? Might have been that, too, because the trading community has been on tenterhooks for weeks, nervously awaiting something, anything, that would snap the markets out of their hypnotic complacency. But we prefer to think it had more to do with the man whose mouth could move mountains in the nineties: former Federal Reserve chairman Alan Greenspan.
On Sunday, as the Wall Street Journal reported yesterday, the now-retired-but-not-yet-inclined-to-keep-quiet former chairman issued another in his endless string of vaguely worded ramblings. "We do not and cannot look into history without being very concerned when you see the absence of awareness and concern about risk that we see today," he said. He was concerned, in other words, about a lack of concern. And, two days later, it was just like old times. With investors now in a panic, you can almost see the perpetually cautious — "irrational exuberance," anyone? — old dog sitting back and smiling, feeling at least a little satisfied that he's still got it. Either that, or, as Marwood mused in Withnail & I, "Even a stopped clock tells the right time twice a day." —Duff McDonald