Don Pittis has reported on business for Radio Hong Kong, the BBC and the CBC.

Why is doom so popular? Whether spurred by U.S. President Barack Obama's attack on the banks or China's latest plan to manipulate the economy, there is always some economic commentator strutting the electronic streets with a sandwich board bearing the words, "The End Is Near" in ragged type.

Obama's bank tax will "cripple the economy." China is a "bubble" waiting to be popped.

Despite reassurances from everyone in authority that we are back on the path to recovery, there is a persistent whiff of doom hanging over the world economy.

And in a strange way, a lot of people seem to like it.

Maybe it is Catholic guilt. (Jewish guilt? Protestant guilt? Bad Karma? Pick your religion.) As if somehow we have not suffered enough for our economic sins. Despite high unemployment and a few months of falling stock prices, there is still an outstanding bill for expiation.

Surely, this is the sentiment that Obama is playing off of. Financial professionals still channel rushing rivers of cash, dipping out liberal buckets for themselves, with little in the way of a visible product. Meanwhile, the new not-working class remains parched.

It has a fin de siècle feel, like pre-revolutionary Russia, where Fabergé eggs co-existed with shivering peasants.

There is only one reason to be in cash right now, and that is fear of the alternative.

The U.S., especially, has a national urge to optimism. But the doomsayers give the warning: the global economy has not yet gone through its cleansing fire.

There is evidence that this is not some fringe opinion. Consider the great piles of cash that Canadians continue to collect against an evil day. I heard CIBC Economist Ben Tal the other day saying that Canadians currently have $120 billion in cash sitting idle in bank accounts. And that is "extra" cash, over and above what they would normally need for things like paying bills, covering expected expenses, mad money.

And there is only one reason to be in cash right now, and that is fear of the alternative.

Consider the scenarios

Doom, like guilt, has many flavours. One scenario involves Japan. A recent article by Ambrose Evans-Pritchard, writing in the Daily Telegraph, said the end of the economic world as we know it would be sparked by a Japanese government debt bubble. He warns Japan is about to make a sudden shift from deflation to hyperinflation.

He points out that previous periods of dangerous hyperinflation have kicked in when a country's sovereign debt lingered above one-third of government expenditures. Japan has been there for years.

Japanese government debt is approaching two and a half times the value of everything the country produces in a year. But Japan keeps costs down by selling most of that debt to its own people for a fraction of the cost of money on international markets.

Evans-Prichard points out that if Japan had to go outside for that money, the cost would eat up all government revenue.

I saw another great doom interview on CNBC with David Roche from the research firm Independent Strategy. He insisted that China was a monstrous credit bubble waiting to be popped. The Chinese government allowed borrowing to leap by 25 to 30 per cent of GDP last year, and Roche says that can't be sustained.

He predicts that ending the credit bubble will result in "a great big mess," with empty buildings, failing property companies and shady deals exposed. He predicts the uncovering of "the Chinese Madoff."

Doomsday cycle

The word "doomsday" actually got into a headline in this week's Financial Times in a commentary insisting that it is not high interest rates but low interest rates that will bring down the world economy. The authors, Peter Boone and Simon Johnson, economists at the London School of Economics and the Massachusetts Institute of Technology, respectively, effectively agree with a recent Economist lead article that "something's got to give."

The professors say charging the banks special fees will do nothing to stop what they call "the doomsday cycle." They say banks will keep on taking big risks to drive up income, safe in the knowledge that the Fed will rush to their rescue with low, low interest rates next time, too.

The Economist put its bubble warning on the front cover earlier this month. The magazine says the problem is more immediate, with assets being propped up artificially by government stimulus spending. And that stimulus has to end sometime.

There are a lot more candidates for the crisis that will bring us all down. Greece, Iceland, a British default, oil inflation, currency collapse. The doom scenarios go on and on.

It may be that a large number of investors are just stupid.

But perhaps the best one of all came from the Financial Times, which warned that the whole basis of market theory is being reconsidered. Investment editor John Authers reports that many experts who study such things have lost confidence in rational markets altogether.

Existing market theory says that when people are allowed to buy and sell freely, even though some people make mistakes now and again, the market as a whole is ultimately rational and efficient. Critics say there are now so many patches on the theory that the whole model is collapsing under the weight of them.

It may be, as I have insisted before, that markets, like weather systems, are too complicated for us mortals. Maybe we have to wait for artificial intelligence to help us truly understand.

On the other hand, of course, it may be that a large number of investors are just stupid. There was new evidence of that this week. All the leftover bits of GM have been assembled into a company called Motors Liquidation. As Toronto-based financial journalist Bernard Simon reported, Motors Liquidation is just a temporary company created to hold the worthless bankrupt leftovers of GM until they can be liquidated.

Despite the insistence by everyone involved that the shares have absolutely no value, by the end of last week, the company had been bid up by investors to $500 million.

No wonder Canadians are nervous.