And another thing: shaky markets

I also wrote the opening mini-essay in this week's magazine (we here at Time call it "The Moment"). It's online here, but it's so short that I might as well just post the whole thing:

It was the stock market's worst month in three years. But the events of the last few days of July felt more ominous and potentially earthshaking than that would indicate. Everybody could see the stock downturn--a couple of sharp drops followed by what looked to be directionless confusion. Yet the sharpest tremors were felt behind the scenes, in the shadowy worlds of private-equity and hedge funds.

These two sectors have grown fantastically over the past decade, and their star performers have been fantastically well rewarded. Three hedge-fund managers made more than $1 billion each last year, reports trade magazine Alpha. Private-equity firm Blackstone's public offering in June made its founders multibillionaires. Now both businesses are under stress.

Private-equity firms buy companies with money borrowed from banks, hoping to sell them at a profit a few years later. The banks then slice up those loans and sell them to investors. At least they used to. In recent weeks they've struggled to find buyers for the debt behind several big deals, most notably Cerberus Capital's purchase of Chrysler. So they're unlikely to finance more big buys soon.

Then there are the hedge funds, unregulated investment firms that had been snapping up that private-equity debt, subprime mortgages and all sorts of other weird new securities. After several years of calm, fund blowups have become commonplace this summer--and because hedgies have lots of leeway in how they value their odd investments, there may be many more blowups in the wings that we don't know about.

What does that mean for the nonbillionaires among us? Hmm. The jury's still out on whether what's good for private-equity firms and hedge funds is good for America. Also, we don't know if we're seeing the end of the boom or just a scary interruption. Decades of academic research has shown that you can't reliably predict the market's path.

Research has also shown, though, that you can at least partially predict how bumpy that path will be. It's simple: calm is usually followed by more calm, and volatility by more volatility. We may have just made the switch from calm days to volatile ones.

If you want to learn more about that academic research on volatility--and I'm sure you do--you're in luck. Nobel-winning economist Rob Engle recently posted a whole week's worth of lessons and lectures about "Global Financial Volatility" on ft.com. Check it out. It'll GARCH you up!