NPR logo Is The Market Behaving Rationally?

Is The Market Behaving Rationally?

Here they come. Don Polovich/ Rapid City Journal/AP Photo/ hide caption

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Don Polovich/ Rapid City Journal/AP Photo/

It's an old question, but one being asked a lot these days. How much of the collapse is just fear?

"Stop the insanity," wrote Glenn Schorr a UBS analyst. "It's all confidence, it's not reality"

And here where I live in Baltimore, the Fortune 500 company Constellation Energy's stock plummeted after what the rating agency Standard & Poor's called an "acute crisis of confidence." (Warren Buffett is now buying it.)

I asked Jeff Frankel at Harvard about all this yesterday. He said sometimes running makes a kind of perverse sense.

"If you're in a stampede, you look pretty foolish" standing still, he said. Plus, "you get killed.

"So it's not exactly irrational from the individual viewpoint."

I thought about this later. People talk about the wisdom of the markets.

Sometimes it's the wisdom of the herd.

Maybe we need one brave cow. Or cow herder, I guess.

Maybe that's the government.