The New York Times on panic attacks. Investor panic attacks, to be precise:

“… many experts say the 2008 financial collapse recalibrated investor psychology. After living through the collapse of Lehman Brothers and the panic that followed, some investors are apt to sell first and ask questions later. Wall Street’s notion of worst-case scenarios has darkened considerably.

“… Financial markets rarely move in straight lines, and whatever the pundits say, it’s not always easy to pinpoint what made them move this way or that on a given day. But in New York, London, Tokyo and beyond, a broad shift appears to be occurring. All those graphs and charts are, basically, a representation of our collective financial neurocircuitry getting a bit panicky.”

Treasurer Wayne Swan has been applying the don’t panic mantra back home in anticipation of the Australian equities and foreign exchange markets being lucky enough to be the first to react to the S & P downgrade, with statements like this to AM‘s Sabra Lane this morning:

“There is not a G20 finance minister who wouldn’t swap places with me in the environment we are in at the moment.”

And this:

“The one thing that all Australians can take great confidence from is the fundamentals underlying our economy are strong and we are in the right part of the world at the right time.”

Prime Minister Julia Gillard has also been using her best couchside manner:

“People should look with confidence at our economic credentials and fundamentals, and people should look with confidence at the ability of this government to deal with global instability. We have done it before. We came out of the global financial crisis without having gone into recession.”

And this report from the IMF over the weekend was employed by both as an additional form of mood enhancer:

”… if global financial markets become severely disrupted or world growth falters, [Australia’s] macro-economic policy is well positioned to respond.”

And thus, through a combination of deep breathing, positive thinking, self actualisation and a dose of common sense, this morning the ASX looks like this:

A drop, a rally, and as we go to press, the makings of a slight freak out. May we prescribe some smelling salts and a good lie down. Breathe, people. Breathe.