The last time the US installed a new president at a time when its stock market had fallen more than 50 per cent, Franklin Delano Roosevelt had some famously calming words: “We have nothing to fear but fear itself.”

That phrase does not sound too reassuring now, however. The past week has made clear that there is a lot of “fear itself” in the market. When fear trumps greed to the extent that we can see at present, that often provides opportunities for contrarian investors to buy cheap. But FDR was all too correct: that fear itself could have real and damaging effects.