Recession talk

The current economic meltdown and my tentative involvement with a project immersing me in Behavioral finance--an area of overlap between psychology and finance--has sensitized me to the the pervasiveness of psychological depression and panic. Yet even here there is some humor to be found.

The day was predicted to be unseasonably warm, with a high of 55 degrees. To get away for a few hours from a series of stressful occurrences in our lives, Joyce and I drove drove west on the Pennsylvania Turnpike. We intended to find a park or small town and walk in a rural setting to shake off the winter and situational malaise we both were feeling. Somehow we missed the exit we were shooting for and had to drive as far as Harrisburg before we could leave the turnpike. It was of little consequence except in extra gas since we had no definite destination. Growing hungry and needing a restroom we headed east for Lebanon on Route 422. As we approached the town the views of silos and pasture gave way to a plethora of used car lots, and autompobile supply stores. There was an abundance of fast food restaurants which we shunned in hopes of funding something a notch better in town. Three times we drove back and forth in Lebanon, from first to tenth street, up Main Street and down Walnut. Perhaps we missed the right section but to my best knoweldge there are no restaurants in Lebebon, not even for a bologne sandwich. (Doesn't it come from there?) Proceeding south back toward the Turnpike I noted we were passing through a tiny town labeled Schleffersville on my map. Seizing the moment, I labeled it "Schleppersville," reflecting my disdain for a place without restaurants. (There were two hospitals we noted, perhaps to treat people who needed to eat out more often.) Suddenly Joyce, who was driving, made a sharp left turn at too fast a speed into the parking area of a Tavern and Diner. Dare we risk a Schleppersville eatery? We had no choice. Our bladders were as filled as our stomachs empty.

It really wasn't that bad once we were able to communicate our lunch preferences. They had a different name for the cod fish sandwich Joyce selected from the menu. My Philly cheese steak and fries were easily understood. The bartender and likely the owner wore a T-shirt showing a large bare bottom breaking wind. "Free gas" was the inscription. I describe this without passing judgment but merely to provide some idea of the local ambience. Joyce used the lady's room and returned with this account. There was a sign on the wall inviting patrons to write "an emcouraging message" and leave it in the basket provided. Joyce wasn't so inclined but was sufficiently curious to read the two messages in the basket. "I have to sell my house. I need money" was the first. The second was neither accepting nor disparaging, merely factual: "Leroy is shacking up with Alma." Somewhat facetiously, and more for my benefit since the town was plainly marked on the map, Joyce asked the waitress : "What town are you in? "Lebanon" was the reply.

Was she reluctant to use the correct name with obvious strangers? Was she Alma and the T-shirted bartender Leroy? Was this really still part of Lebanon and the only restaurant in town, located five miles south? Was the town commemorating a real person named Schleffer and the name therefore eponymous? Was Schleffer a schlepper? I don't suppose we'll ever know. We won't be going back real soon.


O.K. It's hard to read a map in a moving car. I've looked up the town and have found that it is really named Schaefferstown, not Schleppersville. It even has a hotel. I apologize to the good citizens who reside there. It gave us a laugh when we needed it. Schaefferstown sits between Kleinfeltersville and Cacalico, Pennylvania. To us it will always be Schleppersvillle.

The perils of writing

I find rhe writing part of writing exhilirating. I like to be creative. I gain pleasure from a finmished product, especially if I am fortunate enough to find a publisher, a feat that seems to become increasingly difficult.
It is the post-creative tasks that become odious--the endless editing and the marketing that are most daunting.

I looked forward to receiving the final page proofs for Shrink this past week.
I had edited the voume myself several times already and had paid a professional editor to critique what I had writtien. Her critique was most valuable in teaching me some things I was doing wrong but, alas, like me, she missed a fair number of typos and careless puntuation gaffs. The page proofs came as a seemingly finished book, bound with the cover design I had obsesse with the artist. Surely, I thought, there would be no or at best a minimum of errors to be found. Wrong!. I spent a day going line by line and found to my horror twenty mistakes I could not leave uncorrected. All but one were my fault, not the type setter. I checked. They were in the galleys I had approved a month ago. I just hadn't seen them. Psychologists are aware of the ability of the brain to overlook small omissions, to fill in the empty spaces, connect the dots so that we perceive form and meaning with minimal stimulus input. This fact does not absolve me of responsibility here and I will, no doubt, be asked to pay for the corrections in the finished product.

Another frustration arose from a sequel to Shrink that I wrote while waiting for editorial and production process for Shrink to grind out. I wrote a short piece of 14,000 words--the further adventures of my hero in Shrink. What to do with it? I learned it was too long for a short story--usually four to five thousand words, and too short for a novel, the skimpiest of which are about 60,000 words. "So it a novella," I told myself. Many brilliant authors wrote novellas--Hemmingway's Old man and the Sea, for one. Most of the Steinbeck masterpieces also are novellas. Not my newest production, which I call The Last Ride. Novellas are usually 20,000 to 40,000 words. "Add 6.000 words I was told by an editor who publishes anthologies for novellas. I don't want to. The story is tight and fast moving as it stands. I didn't set out to write a short piece. I told the story I wanted to tell and when it was finished I stopped. It had 14,000 words. Does that make me a bad person? "It's a novellete," I was informed. Who wants to publish novelletes? If you hear of someone, let me know.

Books

Over the New Year holiday I visited my daughter and her family in Natick, Mass.
Betsy and Brian gave me a book titled Wilderness Plots by Scott R. Sanders. This is a series of 50 short (two page) vignettes describing people and conditions involved in the settling of the Ohio Valley, beteen 1780 and 185o. They are all interesting
vignettes but the most meaningful is a piece titled Cutting Roads. It describes Ebenzer Zane and sevewn sons who cut trails by ax through the wilderness, including a bridle trail from the Ohio River through West Virginia into Kentucky. This allowed the mail to go through to Ohio.
When I learned that my son Michael and his wife Betsy are to be divorced and that Betsy would be renting a house behind us,separated by a patch of woods, I began a trail between the two houses so that Jack, their six year old, could visit easily.
Michael joined in with his chainsaw and soon the awesome and illegally cut trail was complete. I identified most strongly with old Ebenzer, who was granted 400 acres by the government for his efforts. My recognition, should the trail be found by the owners association, may be quite different.

I was also impressed by one of Brian's books--"Conversations with Neil's brain" by a neurosurgeon and neurophysiologist, whose names escape me at the moment but I have ordered the book from Amazon. The book describes the results of electrical stimulation of the brain to identify the locii of cognitive and perceptual function. Their inferences appear to go beyond their data and also beyond their areas of expertise as they speculate about consciousness, language, dreams and the like. Like other neuroiscientisrts that attributre dreams to meaningless, random noise in the nervous system and not worth the attention afforded to them by therpists. I take excepton to this in two books I have written about dreams ("Demystifying dreams" and "The brain and dreaming") because of my experience with dreams, both personally, and in my private practice. The authors also explain consciuous as the sum total of brain function and no more. In Book Two of Shrink I speculate that consciousness may be much more. Another of the Wilderness Plots vignettes, "Frostbite of the soul," descibes a precher who is also a cobbler. As he stitches his leather shoes he ponders his sermons. He reasons that just as the shoe is the vessel of the foot, so the body is the vessel of the soul. Somehow I identify with the preacher more than the scientists in this matter.

Emotional bailout2

General question: Do psychological constructs lend themselves to organizing and understanding fiscal perceptions and decision-making of investors and can they be used to make these perceptions more accurate and their decision-making more effective?

General thesis: The present economic climate and its depiction by the media has generated a psychological climate of depression, anxiety, helplessness, defeatism, and vulnerability. This feeling is pervasive and behaviorally contagious. Concepts of resilience can be used to build consumer confidence, trust, optimism, and effective decision-making.

Processes: As in clinical states of depression, people view the present economic climate as pervasive, personalized, and permanent. As in anxiety they may behave in hysterical, histrionic, avoidant, and self-defeating ways.

When in fact: Like clinical depression, periods of economic recession are cyclical. Reactions to recession need not be rigid and pre-determined but can include a range of options. Consumers need to overcome feelings of helplessness and to recognize opportunities, while, at the same time, embracing reasonable safeguards and defensive maneuvers. Just as we can ward off depression and anxiety by psychological defenses and effective problem-solving, so we can defend against self-defeating investment behaviors. While Greenspan accurately warned against irrational exuberance, we now need to avoid irrational dismay. During both bull and bear markets the intelligent and emotionally balanced investor finds a middle ground between the horns of euphoria and depression. We need a psychological Abilify to combat bipolar investor syndrome.

Emotional bailout1

The current and lingering economic crisis and financial meltdown has affected everyone. The worldwide recession, foreclosures, increasing unemployment, deterrents to lending, borrowing, and business expansion have affected everyone. It is useful to draw saome parallels between the financial scene and accepted psychological medels, processes and treatment. Only a thumbnail sketch is pressnted here.

Financial capital has its personality counterpart in emotional resources, or what psychoanalysts label ego strength. Money or credit is required to grease the wheels of commerce and business. Ego resouces are required to cope with crises and internal conflict. Liquidity, or the ability to generate monies for business expansion, can be compared with emotional lability needed to respond appropriately, not excessively to external stressors. Confidence in government, leaders, previously valued banks and corporations, and the "American dream," translate into processes of trust in others. Histrically acceptaed support systems --banks, Bernake, Buffet, our homes, and government regulation are perceived as having failed us. Conflicts between advocates of freemarkets and those seeking rescue by the Federal Big Brother are reminiscent of Skinner's battle between free will and determinminm. Any Rand surfaces again.

Clinical syndromes of anxiety and panoic, depression and helplessness, phobias and avoidance behaviors, obsesssive compulsive symptoms have not been confined to psychaitric clinics, hospitals, and consulting roooms and are now commonplace on Wall Street and Main Street. Cognitive and emotional processes are apparent in
in speculators,investors and savers alike and include denial and delusional systems, anger and attribution of blame, loss of trust (e.g., consumer confidence), and attachment.Concepts of risk, expectancy of success, and incentive have direct application in business decision making.

Treatment models for treating anxiety, depression, anger, disturbed and irrational thinking, hysteria, and learned helplessness seem now to be equally relevant to the marketplace. The new emphasis upon positive psychology, heralded by Martin Seligman, may be directly applicable on a national level for a healthy emotional bailout
of our citizenry. We need to embrace concepts of resilience, optimism, and the setting of realistic emotional as well as financial goals. We need to learn ways for turning negatives into positives, to diversify our emotional as well as our financial assets, to avoid despair, sadness, and bitterness, to combat stress with a well oiled emotional immune system. Time is a friend of personality integration as well as financial recovery. Regression toward the mean applies eventially to financial markets. There is no certainty, only opportunity.

On self-esteem

My wife was babysitting two of our seven grandchildren. Ethan and Julia are four year old twins. It was time for Joyce to take them to pre-school. Ethan remarked that perhaps his teachers didn't want them to come to school that day but to stay home and play. "You have to go to school Ethan," Julia lectured to him, as she often does.
"Ethan," my wife offered. "Don't you remember? You are line leader today."
"O.K. I'll go to school."
"Line leaders are very special people" explained my wife.
"No," Julia contradicted. "Everybody gets a turn to be line leader."

Jack, another grandchiold, age five and in kindergatrten plays T-ball and flag football. After the T-ball season everyone on the team received a medal "When I played T-ball," his father remarked, "only the league champions received a medal."

At the high school where I work part time I notive that even children who haven't attended all year often receive "Incompletes" on their report cards rather than Fs.

Psychologist Martin Seligman, in his book "The optimistic child" rejects the common assumption that low self-esteem results in poor academic achievement. It is the reverse, he insists. Seligman attributes the accelerated increase in the frequency of childhood depression over the past 20 years to our prevalent "feel good" philosophy. Everyone seems fearful of destroying a child's self-esteem so that even minor effort, just showing up, is extravagantly praised. Feelings alone do not account for self-esteem, which should be based on actual accomplishments. Parents, teachers, and coaches need to teach children real skills and reward their achievements rather than focus only on building self-esteem by empty rewards and undeserved recognition. Children quickly learn to recognize bogus praise, which may actuually lower self-esteem. Julia was right on target,Joyce off base, if Seligman is right.

On resistance to change

Recently I had cause to ponder the source of resistance I encountered in trying to introduce a new mental health system in a high school at which I provide psychological services. Opposition was encountered despite the sore need for mental hrealth sevices and the receipt of grant support for proposed additions to the on-going program.

During the past presidential campaign both presidential candidates attacked the present administration and promised change. Most voters also seemed to desire change but the change had to be according to their own definition of how it would be structured

A close relative of mine was violently opposed to the Democratic candidate before the election and extremely bitter about the outcome. Her perception of Barack Obama conformes to the worst stereotyping and slander that had been circulated by radical conservatives. She sincerely believes that he is a fanatical Moslem who consorts with terrorists. Furthermore he is a Socialist, despite the fact that she gladly accepts social security and medicare payments and was raised by a family that voted Democratic since FDR and the Great Depression. In her view it is highly likely that the new president will sell out to Islamic interests,will transfer inordinate amounts of her assets to undeserving poor people, will make her pay for universal health care. In fairness to her she opposes using federal bailout money to greedy bankers who caused the present financial crisis, yet somehow attributes the ultimate fault to lie with previous Democratic regimes. She sees no inconsistency in endorsing Republican free trade and anti-regulatory philosophy. Accepting her concepts as true, it is small wonder that she opposes change. I await the building of her air raid shelter.

It seems to me that reaction to proposed change is determined by a definable set of factors. Resistance to change may be directly related to the perceived magnitude of change from the status quo and the perceived risk to be incurred by change, and inversely related to the perceived value of the proposed change both persoanlly and to the system as a whole. Reformers endorsing change need to manipulate each of these factors to win support for their program. The Magnitude factor requires imposition of change in small and grsdually applied stages with proven success of each incremental modification. Attention to Risk requires demonstration of the feasibility of the planned changes without radical disruption of individual or the common good. Manipulation of Value perception requires attention in promoting visible, understandable, and concrete outcomes of change. Rather than emphasizing a global concept of satisfaction of the whatever administration is currently empowered, public relations persons need to address and measure public perceptions of specific components of each of the three determining attitudinal and emotional factors.