Is it the same old story or even worse? That was my first reaction on Monday morning – New York time – to the news that the Japanese Stock Market closed down by 12.4%, its worst decline since 1987, and that European Stock Markets followed suit.

One doesn’t need to be Warren Buffett to assume that something similar would happen later when the New York Stock Exchange opened, which indeed happened.

What caused this plunge, as they call it, in the Stock Markets? Have the traders collectively gone mad, or do they see something on the horizon that scares them?

First, an observation: The conclusion I have reached regarding the plunge in the Stock Markets is that it has more to do with mass psychology than science. When one buys, others rush to buy too, and vice versa.

However, there are certainly some factors that influence them.

I have often referred from this platform to the clouds overshadowing the international horizon. And as I have said, at some point, somewhere, storms will break out. Will it be only in the stock markets, or are the stock markets a precursor to potentially worse adventures?

The immediate cause given for this week’s plunge in the markets is the possibility of a hard landing for the American economy – meaning a severe recession – as implied by the significant reduction in job positions in July.

This reason replaces the wishful thinking that prevailed, believing that the increase in interest rates from nearly 0% to about 8% in record time would pass… painlessly.

Now, many in their panic are demanding that the Fed make a significant emergency rate cut to avoid a hard landing. They are dreaming.

However, the current situation differs from previous ones in the following respect: Apart from the interest rates, the world is also burdened by geopolitical crises. Those of us who thought we could ignore the wars raging around us and continue living our lives as if nothing were happening need a reality check.

We are burying our heads in the sand if we do not see that the situation in the Middle East is developing dangerously for Israel and, by extension, for the whole world. Let’s not forget that Israel has nuclear weapons.

The same goes for those who are not following the massive forces the U.S. is gathering in the Eastern Mediterranean and its warnings to Iran that it will support Israel by all means, hoping in this way to prevent a general war.

The situation is serious. Perhaps extremely serious. This, combined with the lack of international leadership and the impending hard landing of the American economy, in my opinion, is ‘sinking’ the Stock Markets.

What is your opinion?