What a relief. A day without a crisis.
Everything seems to be “in crisis”. You’ve got a credit crisis, a housing crisis, a water crisis, a climate crisis, a dollar crisis, and somewhere, a 42-year old insurance salesman with a sense that something is missing in his life out buying a Porsche or having an affair with his secretary, embracing his mid-life crisis.
The question is whether the bull-market has recovered from its own mid-August crisis. It appears that way today, with rafts of mundane news floating along the news wires. So let’s pause a moment to consider the origin of the word crisis itself. Maybe it will tell us something.
Dictionary.com tells us that our word crisis comes from the Greek “krisis”. To the Greeks it was the “turning point in a disease”. In a literal sense, it also derives from “krinein,” which means “to separate, decide, and judge”.
Well, that makes sense. The bull market in credit caused a kind of disease in financial markets, the symptoms of which were many, many bad decisions regarding risk. All that funny money created an economic fever. Then, as the fever progressed—or in economic terms, as the misallocations of capital in the boom began to be liquidated via bankruptcy, default, foreclosure, and insolvency—the Fed administered more medicine.
Or did it?