Eurozone must work to recapture markets’ emotions

THE eurozone debt crisis may be as much about the heart as it is about the head — like a jilted lover, markets are just finding it hard to trust again.

Behavioural economists say financial bubbles can create an emotional high that turns into a irrationally deep low when the bubble pops — people ignore fundamentals and have only negative associations with certain investments.

“Something like that is now happening with the euro (zone) where it has become contaminated on a psychological level and hated,” says David Tuckett, psychoanalyst and author of Minding the Markets. “It actually is quite a good analogy to think of if your girlfriend has an affair. It’s actually very difficult to get back (together), although it can be done.”