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In the investing biz it's called 'capitulation,' when people simply give up. Investors throw up their hands, sell what they've got, and put their cash under a mattress. We may be at that point now.
The crisis of confidence wracking global financial markets has become so deep and profound, that some observers are questioning the long-term viability of pure capitalism. Even pro-market forces like French President Nicolas Sarkozy have mused that laissez-faire capitalism, as a concept, is essentially dead.
What a shift from recent times, even just last year. The author Nassim Taleb (The Black Swan) has opined that the stock market itself is a kind of mild Ponzi scheme, in that if people lose faith and start pulling their money out, it all falls apart like a house of cards. That's the historical moment we're in, when the Jakarta Index, the Dow Jones Industrial Average, and every other benchmark out there is being beseiged by an utter lack of confidence.
For good reason, since many American banks are now effectively insolvent, owing more than they're worth. But given that equities are priced for Armageddon, for those with a cash pile and a long time horizon, it could be a time when fortunes are made.
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