Jan. 28 (Bloomberg) -- If in late 1999 someone had told you what the world would look like in early 2005, you would not have been surprised when they also told you gold would be near a 16- year high and oil would be approaching $50 a barrel.

What you might never have guessed is that Wall Street would be behaving as if the boom in political chaos was otherwise financially irrelevant.
In a column for Bloomberg News earlier this month, Caroline Baum pointed out that it's been a long time since the U.S. bond market jumped around the way it did back in the 1980s. Even more surprising is that the American investor has come to assume that his stocks and bonds won't jump around much in the future either.

The price of insurance on U.S. financial assets has collapsed. Options on U.S. stock market indexes, for instance, are as cheap as they've been in a decade. Another echo of the general absence of financial anxiety: The premium that shaky companies must pay to borrow money has been falling steadily for the past two years.

Quickening Pulse

When you board a plane, or cross a bridge, or travel to New York City on business, you probably do it more anxiously than you did four years ago. But the markets do not share your fear. They are behaving as if the risks to American economic life are so trivial they can be ignored.

On the face of it, the sheer calm in the U.S. financial markets is bizarre. The sort of bad things more likely to happen now than just a few years ago
-- bombs exploding in shopping malls, U.S. air travel suspended for weeks at a stretch, religion- inspired coups in nations rich in either oil or nukes, the American military bankrupting the American government -- would seem to be just the sort of things that might disrupt the American economy, and panic the American investor.

True, these events are hard to predict -- if the CIA has no idea what al-Qaeda will do next, how can you? -- but their unpredictability only deepens the mystery. The absence of information usually makes investors more risk-averse; in this case it seems to have offered investors an excuse for ignoring the risks altogether. The Age of Terrorism has brought to Wall Street a blitheness of spirit.

Are You Worried?

It's possible that the financial markets know what they are doing and that isolated acts of terror -- the odd nut job getting his hands on nuclear weapons, the occasional coup, indeed news from abroad in general -- will have little effect on the future value of our domestic assets.

It's possible, what with a more transparent and predictable Federal Reserve, that the U.S. financial markets have become inherently more stable. It's possible that the sort of sophisticated investors who make their living by selling options and buying junk bonds know something that I don't.

It's also possible that the sheer newness of our age's political risks has created some odd incentives for the more sophisticated risk-takers -- and that a lot of smart money managers have been given yet another way to get paid for taking risks without acknowledging what they are doing.

Comfort in Crowds

Somewhere out there, I'll bet, is a hedge fund manager, or an arb trader at a big Wall Street firm, inventing a clever new technique for shorting U.S.
stock market volatility, or for lending money at surprisingly low interest rates to surprisingly insolvent companies.

Like everyone else, he feels the new risk in the air; like everyone else, when he boards an airplane he feels a quickening of his pulse. But he also knows that he is unlikely to be blamed if something shocking happens tomorrow.

If al-Qaeda discovers the American mall, or the Pakistani generals are decapitated, or Osama bin Laden goes nuclear, sure, he'll lose a bunch of other people's money. But so will a lot of other smart people just like him.

And so he won't be held responsible, at least not in the usual, draconian way. After all, no one else saw it coming either.