Dancing? Catastrophilia? How else would you characterize the following graphs? In the first, we have the wild swings of the markets in the last three months (in a nevertheless bell-shaped normal curve!). In the second, we see a wild sterling threatening the financial stability of the U.K. markets. In the third, we observe the CDC market (insurance against default) of Credit Suisse skyrocketing (due to fears of default which we consider a bit exaggerated), reminding us of the days back in 2008.
Any form of tyranny (political, military, economic, religious, financial), including the tyranny of fear, always drains humanity of its capacity for virtue and/or its capacity to act wisely. But isn’t that the message that Socrates taught us in Plato’s Republic? If that is taken as a true statement, then what changed between Friday of last week and yesterday? Did the economic fundamentals change? Did we get marvelous corporate earnings that erased the fears of the last three months? Did inflation exhibit unexpected signs of slowing down? In our humble opinion, nothing of that sort took place, so the market performance (see below) on Monday and Tuesday is reminiscent of a dance outside the gates of fear, celebrating (rightly or wrongly) the expectation that the era of raising rates by 75bps is coming to an end. Investors are coming out of the cave, seeing the light of the day and are wondering if Lord Acton has started drafting the history of their liberation. (BTW, the sterling recovered too, while Credit Suisse’s stock also closed higher).
The above picture of market performance on Monday and Tuesday reminds me of the soldiers crying out “Thalatta, Thalatta” (“the sea, the sea”), in Xenophon’s “Anabasis” (a.k.a. “The March Up Company” or “The Ten Thousand”). Xenophon’s book signifies the march toward a new polity, under very dangerous circumstances after a collapse has taken place (Athenian collapse following the Peloponnesian War). The Athenians signed up as mercenaries for Cyrus in Mesopotamia when the Peloponnesian War shattered their polity and existence. When Cyrus was killed, along with a number of their generals, the Athenians were on the run for their lives. They started marching towards the Black Sea in order to find their way home. They chose Xenophon to guide and lead them in very unfriendly territory, in the midst of numerous and constant assaults.
Xenophon leads them into a new Odyssey of finding their home. Xenophon was the Lord Acton who led them to liberty from their fear that another life-shattering event was going to devastate their lives. The soldiers find their voice because they had paideia. They democratically chose a leader to liberate them from their fears. The way that Xenophon was chosen solidifies a new polity after the crisis. Xenophon orchestrated a military retreat that John Ruskin called “more honorable than a thousand victories.” During their retreat, the Ten Thousand formed a new polis on the march. When they finally saw the sea, they thought that their odyssey was over. The reality was that they were hardly past the halfway mark.
As we dance outside the gates of fear, are we preparing like the Ten Thousand for a victorious retreat that will truly take us back home, while comprehending that the trials are not over yet?
Dancing in the Gates of Fear: Market Mayhem, Catastrophilia, and Xenophon’s Anabasis
Author : John E. Charalambakis
Date : October 5, 2022
Dancing? Catastrophilia? How else would you characterize the following graphs? In the first, we have the wild swings of the markets in the last three months (in a nevertheless bell-shaped normal curve!). In the second, we see a wild sterling threatening the financial stability of the U.K. markets. In the third, we observe the CDC market (insurance against default) of Credit Suisse skyrocketing (due to fears of default which we consider a bit exaggerated), reminding us of the days back in 2008.
Any form of tyranny (political, military, economic, religious, financial), including the tyranny of fear, always drains humanity of its capacity for virtue and/or its capacity to act wisely. But isn’t that the message that Socrates taught us in Plato’s Republic? If that is taken as a true statement, then what changed between Friday of last week and yesterday? Did the economic fundamentals change? Did we get marvelous corporate earnings that erased the fears of the last three months? Did inflation exhibit unexpected signs of slowing down? In our humble opinion, nothing of that sort took place, so the market performance (see below) on Monday and Tuesday is reminiscent of a dance outside the gates of fear, celebrating (rightly or wrongly) the expectation that the era of raising rates by 75bps is coming to an end. Investors are coming out of the cave, seeing the light of the day and are wondering if Lord Acton has started drafting the history of their liberation. (BTW, the sterling recovered too, while Credit Suisse’s stock also closed higher).
The above picture of market performance on Monday and Tuesday reminds me of the soldiers crying out “Thalatta, Thalatta” (“the sea, the sea”), in Xenophon’s “Anabasis” (a.k.a. “The March Up Company” or “The Ten Thousand”). Xenophon’s book signifies the march toward a new polity, under very dangerous circumstances after a collapse has taken place (Athenian collapse following the Peloponnesian War). The Athenians signed up as mercenaries for Cyrus in Mesopotamia when the Peloponnesian War shattered their polity and existence. When Cyrus was killed, along with a number of their generals, the Athenians were on the run for their lives. They started marching towards the Black Sea in order to find their way home. They chose Xenophon to guide and lead them in very unfriendly territory, in the midst of numerous and constant assaults.
Xenophon leads them into a new Odyssey of finding their home. Xenophon was the Lord Acton who led them to liberty from their fear that another life-shattering event was going to devastate their lives. The soldiers find their voice because they had paideia. They democratically chose a leader to liberate them from their fears. The way that Xenophon was chosen solidifies a new polity after the crisis. Xenophon orchestrated a military retreat that John Ruskin called “more honorable than a thousand victories.” During their retreat, the Ten Thousand formed a new polis on the march. When they finally saw the sea, they thought that their odyssey was over. The reality was that they were hardly past the halfway mark.
As we dance outside the gates of fear, are we preparing like the Ten Thousand for a victorious retreat that will truly take us back home, while comprehending that the trials are not over yet?