Word: panic
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Dates: during 1990-1999
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There was remarkably little evidence of panic among individual investors last week. One measure of that is the amount of money that flows in and out of equity mutual funds. In August, a month that included several gut-wrenching weeks, there was a net outflow of $5.4 billion, or well under 1% of the total invested in equity funds. Though this was the first such exodus since the recession and stock slump of 1990, the number is still quite modest when compared with the 4% that fled equity funds after the October 1987 correction. Last week investors pulled...
...many countries, the pitch of chaos Russia reached last week would have produced panic, fury, demonstrations, even riots. The street value of the ruble halved. Banks are tottering and closing, and the Moscow stock market has all but evaporated. The crash has shaken investors and governments around the world. But in Russia, home of the stolid and the depoliticized, the streets are calm and there is no sign of unrest. Russians are nervous and ask one another what is going to happen, but the only visible reaction is at the banks, where the relatively few citizens who trusted other people...
...sell out, until the limp, overloaded markets finally shut down. Russia, deprived of international capital--James Dorn of the Cato Institute calls it "financial morphine"--went into shock. Explained Steven Halliwell, a partner at River Capital Management: "As far as we can tell, Russia is in an absolute panic situation...
...panic spread. Hardest hit were countries in Latin America. To outsiders, the link seemed strange: nations such as Venezuela and Brazil have very little exposure to Russia, but their economies suffered nonetheless. "Latin markets are right to think that this is a moment of complete irrationality," says Bond Snodgrass, an analyst at Warburg Dillon Read in Mexico City. "But this should finally drive home the point: Mexico is no longer just Mexico, Brazil is no longer just Brazil. They're all part of one asset class now, and investors aren't distinguishing between any of them." And the dramatic drop...
...contagion" of the Russian ruble collapse--itself tied to the panic that has followed Asia's currency depreciations--has sent off economists and investors for some soul searching about emerging markets. These young tigers do not yet have the kind of social and business structures they need to build stable, prosperous capitalism. The ultimate effect on the U.S. remains to be seen. Ironically, the hit from Russia may free the Federal Reserve to lower U.S. rates, kicking off another round of strong domestic growth...