Is global gloom overdone?

I have been saying for a while now the situation in the financial markets is not of catastrophic proportions. That would be the case only if there was the prospect of major bank failures- and there is little evidence of this so far. Yes, banks will face lower profit margins and bankers' bonuses will shrink but neither of this is such a big deal. I can't see the real economy being impacted to the extent that financial market pundits think. Of course, growth in the US will take a beating but the global economy should grow in line with rates seen before the recent boom- or so I have been saying.

I am gratified, therefore, by the comments of a manufacturing head in Europe. BASF CEO Jürgen Hambrecht is quoted in the FT as saying:

“I am glad to say that business in general does not show the panicking approach of the financial industry. The reality is better than the words [written about the scale of problems] and I am sleeping well at night. ...In the real economy – in much of manufacturing – many companies have a big order backlog and are extremely busy with meeting demand. In this context, why should there be a big, big crisis? I can’t see this happening."

The FT report adds:

European manufacturers remain optimistic that sales will increase in 2008 and their businesses will remain immune from deepening gloom over the US’s economy and in its companies.<>In a pan-European survey of expectations by the NTC Economics consultancy, 56 per cent of European manufacturers expected sales volumes to rise in the coming year compared with 12 per cent forecasting a decline

It makes me wonder.... How much of the panic in the financial markets is intended to be self-serving? You create a big hullabaloo so that the Fed keeps cutting rates and this helps shore up asset prices. Good for bankers and their bonuses but does the world economy need all this pessimism and the Fed response to it?