The negative fear bubble
Posted by Izabella Kaminska on Jul 10
Some wise words from John Kemp at Reuters on Tuesday, now contemplating the side-effects of the bubble in fear:
It is the importance of non-rational motivations that explains why Keynes placed so much emphasis on “animal spirits” or the state of investors’ and entrepreneurs’ expectations. By sapping that willingness to shoulder a degree of incalculable uncertainty, the bubble in fear destroys the vital process by which economies form capital, grow and generate employment.
In short, irrational fears are prompting a run on safe assets which in themselves are leading to….”