Ashoka Mody, Columnist

The Market's Troubling Message

We'd like to think investors are overreacting. But they may be onto something.

January 27, 2016 at 7:00 AM UTC

Ashoka Mody is a visiting professor in international economic policy at Princeton University. Previously, he was a deputy director at the International Monetary Fund's research and European departments. He is the author of "EuroTragedy: A Drama in Nine Acts."

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Photographer: Michael Nagle/Bloomberg

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Amid one of the worst market routs on record, a chorus of reassuring economic commentators insists that global fundamentals are sound and investors are overreacting, behaving like a panicked herd. Don’t be so sure.

Consider how wrong economists have been about the effects of the 2008 financial debacle. In April 2010, the International Monetary Fund declared the crisis over and projected annualized global growth of 4.6 percent by 2015. By April 2015, the forecast had declined to 3.4 percent. When the weak last quarter’s results are released, the reality will probably be 3 percent or less.