When markets crash other opportunities to invest duly appear

The question is whether this is just another outbreak of the whim or whether the rout in equities and corresponding further strength in bonds actually makes any sense.

Markets have plenty of reasons to be anxious. The world does feel a harsher, less friendly place than just a few weeks ago. That the consensus growth forecasts are heading south is nothing new; indeed, they have been doing that ever since I was so rash as to ponder out loud whether everyone was being a tad too pessimistic. What is new is that politicians have finally demonstrated beyond all possible doubt their unique ability to mess everything up.

You never quite know why markets are falling until some time after the event, but already we can be pretty sure where the accusing finger of historical analysis will point. Across the pond, America's motley crew of congressmen and senators deserves to be cast adrift on a (leaky) barge with no food or water.

The upshot of their posturing over the borrowing ceiling is a monumental double whammy: an already sick economy is set to be hit with fiscal tightening at just the wrong moment while nothing at all has been done to engender any hope that the public finances will ever be put on to a sounder footing.

That a ratings agency should have downgraded the world's beefiest economy says it all. So a recovery pause induced by the oil price shock really might morph into a new phase of negative growth, all thanks to that bunch of intellectual pygmies and their outsized egos.

It's not really any better in Europe. Unable to grasp the concept that policy responses to the Greek, Irish, Portuguese, Spanish, Italian (and so on, you name them) crises of which only a bunch of headless chickens could be proud will leave markets unwilling to trust anything they say, Europe's bigwigs continue to believe that talk and grand gestures will somehow sort the unsortable. So Europe is doing what it does best: turning a pretty nasty problem into a catastrophe.

When markets are faced with such mindless destruction it is no wonder they take fright. With a 'double dip' in the US upped from a long shot to roughly evens and rugs being pulled from under the banks, the environment for risk assets has clearly changed. In such times, the last thing bond investors worry about is the price; thus the UK ten-year gilt now yields a derisory 2.6 per cent, a level last seen before this retired economist was born. This is heady stuff, but you can't really say it's irrational.Being rational is one thing; being right is another. What makes sense in the heat of the moment is often not ultimately sustainable; the giveaway is usually visible, for those who take the trouble to look, in valuations.

With the myth that all Euro bonds, regardless of issuer, are equally safe now exploded for good, the rush to "quality" leaves yields on US Treasuries and UK Gilts hard to explain in terms of normal fundamentals. Conversely, lower equity prices which make sense in the face of likely lower growth do bring the incidental benefit of higher yields. Unlike governments, companies are financially strong and provided you look in the right place they offer secure, often inflation-beating, cash-flows and income streams.

Counter-intuitive it may be, but in this uncertain world a portfolio of companies with strong cash-flows and secure franchises, where the greater part of the long term total return comes via the dividend, is probably the safest place to be. In a tizzy or not, markets are offering shrewd investors another contrarian opportunity: I'd say we should take it.

• Peter Bickley is a consultant economist.