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Irrational exuberance inverted
In The Week’s editor’s letter, Wilkinson asks whether we are now pointlessly glum
Francis Wilkinson
Francis Wilkinson
C

opies of Dow 36,000 go for a buck from Internet booksellers--not that there are necessarily any takers. The Dow ended 1999, when the book was published, well above 11,000. Today, 11 years later, investors would cheer to see that height reclaimed. Dow 36,000 quickly evolved from startling prediction to silly punch line. But lately I’ve wondered if the delusional faith in ever-rising financial markets that the book came to symbolize may have given way to a similarly ill-founded pessimism.

The Great Recession has taken a brutal toll on American confidence in all its guises--investor, consumer, citizen, voter. The business press is laced with gloom, including reports of investment funds designed to exploit catastrophe. NYU economist Nouriel Roubini, who famously predicted the financial crash, has been raising alarms about the potential for a double-dip recession; his anxiety-inducing analysis is said to be much in demand among business clients. Historian Niall Ferguson is also making the consulting rounds. His darker pitch sees and raises Roubini, blowing past double dips to wholesale imperial collapse, with the U.S. (and its $14 trillion economy) cast in the hapless role of the Soviet Union circa 1989, or Rome in its penultimate days. I’m no economist, but it was Warren Buffet who said, “Be fearful when others are greedy, and be greedy when others are fearful.” With that in mind, I’m looking for the sunny side of markets. But I’ll also keep a watchful eye on the used-book biz. If a bout of irrational exuberance drives up the price of Dow 36,000 to a buck fifty, I’m cashing out.

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