Compare and contrast. American market commentator Jim Cramer screaming Armageddon in a YouTube hissy fit that did the rounds of trading floors across the City of London and Wall Street.

Or fund manager Edward Bonham Carter, whose sang-froid in the face of the market meltdown was such that he saw no reason to cancel his plans to go to Glyndebourne to hear Wagner's Tristan und Isolde on Friday afternoon.

Which of the two is right? It is always possible that Bonham Carter was merely putting on a show of calm - though in that case he is even better at acting than his sister Helena - and he does have a vested interest in talking down the panic. Even so, my bet is that his steely-nerved response will turn out to be the correct one.

That is not to say that the volatility is trivial or that it will be over soon. We can expect it to continue for several months and that the casualties will mount up on top of those that have already come to light, including the closure of three hedge funds by BNP Paribas, one of the triggers for last week's crisis.

There will be more unpleasant news from banks and hedge fund managers, whose shares were marked down severely, as they work out their losses. Private equity deals are being put on ice and corporate takeover bids are likely to be in jeopardy, not least the battle between Barclays and a trio of banks led by Royal Bank of Scotland to buy Netherlands institution ABN Amro.

Barclays, whose share price dropped more than 6 percent on Friday, denies it is planning to walk away from the deal, and hopes to receive approval for its approach from Dutch regulators this week. But its chances of success are looking slimmer and its executives are well aware that market conditions would provide a perfect fig leaf for their pride were they to ditch the bid.

Sir Fred Goodwin at RBS was also putting on a brave face at his shareholder meeting, but his partner, Fortis, which has to raise a mammoth 13 billion euros ($17.76 billion) in a rights issue, is clearly a weak link. The Qatari bid for J Sainsbury is another that could be undermined by rising debt costs.

In neither case, however, would that necessarily be a bad thing. For Barclays, which has made huge concessions to try to bag ABN Amro, failure might turn out to be a merciful release and the Qatari offer for Sainsbury had too many unknowns even before the current crisis of confidence.

Ordinary investors are exposed mainly through company and private pensions. Final salary schemes of FTSE 100 companies, which had a collective deficit of 36 billion pounds ($72.65 billion) last year, had swung into a 12 billion pounds surplus in mid-July, according to actuaries Lane Clark & Peacock. Most, if not all, of that cushion will have been wiped out in the past few days - though experts believe that funds' failure to take account of longer life expectancies is a far bigger risk to members than short-term market gyrations.

The impact will be felt on direct share holdings and unit and investment trusts; there may also be knock-on effects in the housing market as banks tighten credit conditions, making it more expensive to borrow.

Despite the frightening behavior of the bond and stock markets, the world economy is in reasonably good shape and so far the financial problems in the US have not turned into a full blown social and political crisis.

Most companies have not over-borrowed and can be comforted by strong balance sheets. It could turn into a real economy crisis if a big bank were to go under but the sector has turned in strong profits and there is little sign of that happening at this point.

Private investors would be well advised to sit on the sidelines for a while. Historically, however, it has made sense to buy assets when the balance of emotion tips from greed to fear and veterans such as the Sage of Omaha, Warren Buffett, are doing precisely that.

The Guardian

(China Daily 08/14/2007 page11)