Philosophers and politicians may agree that you should face down your fears in order to obtain wisdom and courage, but they are not the ones investing in the stock market at the moment. The stomach-churning losses in the last week may have underlying causes but the momentum of short-selling is attributed above all to the smell of fear.
Still, one person's loss is another's opportunity. The global panic in the markets happens to coincide with the publication of Robert Harris's new thriller. In it, a brilliant scientist invents a computer that can make predictions about the global financial markets. The computer picks up a far more powerful force in the markets than information. It is fear, the most primal emotion. As Napoleon said: " There are only two forces that unite men. Fear and interest." When the two come together in stock markets, the results are catastrophic.
Harris's title, The Fear Index, is close to the market instrument The Volatility Index, a measure of the volatility in share prices. It can tell you how everybody is feeling. At the moment, investors are buying gold. Does that suggest that they think things can only get better?
The strongest characteristic of fear is its contagion. You would guess that since the markets are being scrutinised by experts they could form calm independent opinions. But investors turn out to be more hysterical that the rest of us, probably because they have a lot more to lose.
As Harris's computer creeps into the territory of artificial intelligence, it realises that terrifying people can be a reliable way of making money. I hope that The Fear Index is not the inspiration behind the decision of some famous investment bankers to go and form their own hedge funds. Is this the way the world ends, with one mass global short-selling?
The risk-takers will no longer say boo to a goose. They are hoarding like hairy survivalists. Who will tempt them out of their shelters? After the gigantic hoax of sub-prime lending, financial institutions may never trust each other again. Everyone is looking over their shoulder – Europe at Asia, Asia at America – while investors' heads are swivelling frantically.
The trouble with the fear index is that it crushes hope. Financial giants such as the American investor Warren Buffett may talk of having a "huge bull on this country" but people are too spooked to believe him. Whether or not we are all heading for a double-dip recession, we will talk ourselves into one. No private investment: no growth.
What we need is a genial figure radiating Reaganesque sunny politics, but unfortunately David Cameron is now about as cuddly as Robespierre. The fear index is social as well as financial. We have peered into the abyss of disorder. At first we blamed gangs and criminals, but within a week everyone was citing the Stanford prison experiment – where half the students were told they were guards, the other half prisoners – and civilisation was hanging by a thread.
A young woman who lives in Tottenham told me that she was still afraid to come to work in central London. It was not the prospect of looters she feared but that the riots would be a catalyst for a terrorist outrage, "because we are vulnerable now".
Once fear is triggered, it is very hard to restore calm. But I recommend the banner held aloft by a woman in London. It said: "Everything is OK."
Sarah Sands is deputy editor of the 'London Evening Standard'