It's open season on men in gray flannel suits this month, as citizens irate about the loss of $11 trillion in home and stock values have found a set of greedy, reckless insurers, bankers, politicians and TV personalities on whom they can vent their frustrations. Three "booyahs" for the baddies.
Blaming someone else for your troubles is as American as handguns, yet it's fair to wonder whether some of the madness is misdirected. For below the surface of the anger on talk radio, the finger wagging in Congress, the Cramer baiting on TV and subpoena waving in statehouses lies the uncomfortable fact that most U.S. consumers were culpable in the borrowing binge that underlay the credit crisis.
Much like drug abusers who complain about their nasty, cheating dealers, most Americans were users who were used. And now we're in rehab, secretly wishing for another shot at cheap, abundant credit while at the same time trying to deal with the idea that it's probably never coming back.
In this context, the rash of rancor that has raked our culture in recent months is just a stop on the psychological spectrum that Elisabeth Kübler-Ross wrote about in her 1969 book, "On Death and Dying." She described five stages of grief -- denial, anger, bargaining, depression and acceptance -- that some experts believe Americans are enduring now, both individually and as a group.
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Borrow lots, deny even more
Do you recognize your own emotions somewhere along that path?Social anthropologist Jim Williams has been chronicling this journey for the past decade for his clients in the institutional-investment community, and he believes that acceptance -- the final resting stop for healing and peace -- is a long way away.
His analysis is more than just a pedantic way for an academic to sort through the ethereal qualities of the physical world. Because if policymakers can understand that citizens' yearning for heads to roll comes from somewhere deep inside the subconscious, rather than from mere bloodthirstiness, then they can draft more a more effective, farsighted set of laws and rules to prevent another financial crisis from occurring.
The first wave of credit correction then occurred in the bear market of 2000-02, and that was the first massive clue that an over-reliance of borrowing could lead to extreme danger. Williams believes the period from 2003 to 2007, in which credit was ramped back up again by the Federal Reserve, amounted to a denial phase in which people tried to forget losses incurred in the tech bear market.
An adherent of the Jungian strategy of relying on individuals' uses of symbols to tell their inner stories, Williams back in 2003 highlighted the use of the color pink then in clothing and advertising. He stated that pink has an illusory component, as seen in rose-colored glasses. Americans jacked up their personal borrowing dramatically that summer, ultimately pushing consumer credit outstanding to $1.7 trillion. Banks, companies and consumers alike denied the risk of heavy borrowing.
The denial stage lasted through mid-2007, and since then home and equity prices have peaked, wiping out $50 trillion in consumer net worth through the end of 2008. That was quickly followed by overlapping waves of anger, bargaining and depression.
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The end of the 401(k) match?As workers try to rebuild retirement portfolios decimated by the bear market, companies have started cutting the match on employee contributions, Jim Jubak says. (March 12)
Raging against the money machine
An example of bargaining is the Treasury Department's attempt to paper over massive losses at banks with $750 billion dispensed through the Troubled Asset Relief Program and $200 billion to be lent to consumer credit issuers via the Term Asset-Backed Lending Facility. Neither program will fix the root cause of the U.S. financial system's woes; instead they strike deals that will delay the harshest effects of damage already unleashed.You don't have to look far to find examples of anger, as folks from the president of the United States to TV comedians are calling for financial executives to disgorge compensation and for the media to say they're sorry. American International Group (AIG, news, msgs), a ward of the government after suffering spectacular losses that threatened to bring down the global banking system, had to post armed guards at company facilities to prevent employees from being lynched. A senator this week even called for AIG execs to kill themselves via the Japanese penitential ritual of hara-kiri.