Fear levels are rising

Despite my predilection for assertions to be based upon careful analysis, judiciousness and even-handedness, I must admit that often I trust my "gut".

And at the moment, my gut is detecting a heightened level of fear. Reading financial news and econ-bloggers in the last couple of days has created this. It has moved on from assertions that this is a very, very bad crisis to hard facts proving that this is a very, very bad crisis. In short, the doomsayers are being proven right and some - myself included - are finding that their own predictions of doom were actually quite mild compared to what has actually happened.

As I mentioned a month or two back, I feel like I've predicted a Category 5 hurricane and hundreds of deaths, only for a Category 6 hurricane to arrive and kill thousands.

And yes I know a Category 6 is not a real category. I claim artistic licence.

A while back when the Dow was cliff diving, I made a little joke about "Dow 3600.00", a sort of econ-doomer reponse to that awful book Dow 36,000 that was published back when the tech boom was supposedly disproving everything we knew about finance and economics.

And when I check up Angry Bear, what do I find? A link to a report from CNBC saying that the DJIA could drop down to 4500 within the next 12 months.

Furthermore, Brad Setser has now declared that "There is now little doubt that this is the biggest financial crisis since the depression". We doomers have been predicting it for years. Now that it has happened, it makes it even more frightening.

And then I read this:

Total US Dollar Credit Market Debt Now Stands at 350% of GDP. This cannot be sustained. Certainly a certain portion of credit will be written off in defaults. But notice that the strategy of the US is not to make structural reforms but to try and restart the debt creation engine. This will require continued subsidies from foreign sources with waning appetites for US debt that can never be repaid.

...which neatly ties in with all the dollar-doomer articles I've been writing for a while.

This is all just so terrible.