Dissociative Amnesia

Psychology, my college major, is a social science, not regulated by real math or hard science, but governed by just-conceived “statistically significant” theories. The field of study is fraught with periodic eliminations of previously-thought treatable medical diagnoses (neurosis of the 1950’s) and re-definitions of old disorders (was multiple personality-now dissociative identity disorder). Without diving deeper into today’s psychology theories, let’s focus briefly and admittedly amateurishly, on one of the newly-defined dissociative disorders, dissociative amnesia.
The Mayo Clinic states the main symptom of dissociative amnesia as “…memory loss that’s more severe than normal forgetfulness and can’t be explained by a medical condition…an episode may last minutes, hours, or, rarely, months or years.” Many of us have necessarily resorted to self-imposed, periodic onsets of dissociative amnesia when asked to discuss or understand today’s money matters. As we have gradually slipped into a world of global economics, we have been asked to forget a lot of what we learned was true about national financial certainties.Today, we are lectured that it is not important that any one county is literally insolvent, bankrupt, if you may.

That countries in Europe may be running ridiculous deficits to support their own political promises seems no more or less significant than our own country’s claims that being trillions (yes…12 zero’s after a number!) of DOLLARS in debt is inconsequential . Let’s once again try to comprehend the number trillion. (A) You are able to carry $10,000 of hundred dollar bills in your pocket easily. (B) You can stuff $1,000,000 worth of hundred dollar bills into a grocery bag and walk around with it. (C) $100,000,000 of hundred dollar bills can fit inside your walk-in closet or gun safe in the basement on a standard pallet. (D) For a billion…$1,000,000,000 of hundred dollar bills, it is possible fit all of the hundred dollar bills inside your triple-car garage. Now, get ready for this visual:

This is the number of PALLETS (double stacked) of hundred dollar bills it would take to total a trillion dollars, $1,000,000,000,000. It is not necessary for you to try to count these pallets, only to attempt to contemplate how much larger a trillion is than a billion, let alone a million.
Back to dissociative amnesia. Each of us, including the Chair(wo)man of the Federal Reserve and President of the United States, must immediately self- impose this psychological disorder in order to postulate how unimportant something so mundane as the federal deficit is today. We are also required to NOT associate national or global deficits with recent massive gains in the equity markets . We must not consider deficits when predicting future economic growth WITHOUT central bank stimulus. Additionally, it is mandatory that we now conveniently “forget” about ever again receiving reasonable interest rates on our retirement savings bank accounts.
Any of us who is determined to understand or discuss subjects like national deficits, seemingly endless stock market gains, or current non-existent interest rates, simply needs to forget virtually everything that used to be “normal,” AND as we have recommended above, merely self-impose dissociative amnesia. It is not necessary to place a time limit on our disorder, as only the future will dictate when we are allowed to remove it from each of our daily economic analysis efforts. As it has always been advertised that “misery loves company,” be assured that you are not the only one in the room experiencing cases of self-inflicted DISSOCIATIVE AMNESIA.

There really is an Emerald City and we live there!

For the past nearly five years, since the September, 2008 Lehman blow-up and subsequent real estate and wall street meltdown, many economic doomsayers have been predicting various end-of-the-world-as-we know-it scenarios.  Even yours truly has fallen prey to at least considering the possibility of single country failures, currency collapses, a near-depression economy, unimaginable gold prices and other bleak fiscal circumstances. Allow me to go on record this sunny, late-March day in 2013 by admitting the absurdity of imagining that any of these events could ever actually happen. After all, we are all living in the Land of Oz and my friends, it is alive and well.

Anyone worrying about the PIIGS (especially Greece-the G), the European Union & America’s collective massive debts, and most recently Cyprus’ bank reorganizations, seems as foolish as Dorothy’s scarecrow was worrying about not having a brain.  How lucky he was to finally meet the Wizard and find that all he really needed was a diploma! And how blessed are all of us to learn that to stay afloat, the world merely requires a sympathetic Federal Reserve chairman who can make debt seem as inconsequential as a scarecrow needing a brain. With a supporting cast including the European Union (EU), how could any of us lose confidence of surviving anything so miniscule as government over-spending or bank deposit taxation. Tsk, tsk!

Why am I suddenly so optimistic? After just surviving winter’s final blast of a late-season snowstorm, perhaps it is this fine spring day that is fueling my cheery thoughts. Or maybe it is reality; a comprehension that the “game of working and buying & selling (WB&S) must go on” and there is no alternative. Each time I fly and the plane rises above a densely populated city, I think, “There are a lot of people living there, WB&S every day. Whatever the worry of the day is, it is impossible to stop WB&S, the engine of the economy.”  Since the beginning of time, it has been necessary for the “game to continue.” That is, regardless of any dire circumstance… World War, plague, famine, unsavory government, excessive religious fervor…it has been critical that people continue to W and B&S their stuff.

People with a lot higher pay scale than I have ever achieved are still running the world and they will make sure the “game continues.” I have no concept what the solution for Cyprus will eventually be, nor do I have any inkling of an idea how to solve any of the other aforementioned financial crises that face the world today. One thing that I am sure of, however, is that a Wizard will appear and rebuke me and anyone else who doubts his authority and or ability to keep the game (WB&S) going.

“Do you presume to criticize the Great OZ? You ungrateful creatures…You are talking to a man who has laughed in the face of death, sneered at doom, chuckled at catastrophe!”

How dare any of us question an entity of such importance.  Rather, let each of us eat, drink and most especially, BE MERRY! And if a munchkin offers you a giant lollipop, go ahead and take it, without concern of consequences…tsk, tsk…cavities and stomach aches are for losers.

The fiscal little hill

There seems to be little continued interest in the mechanics of whether or not Congress will eventually raise the debt ceiling. Today, a report of the GNP in the USA showed a slowdown and the likely suspect was said to be temporary sequestering of some budget items, including military expenses. By the afternoon, the markets had shrugged off the lower GNP and resumed the countdown towards reaching all-time highs for both the DOW and the S & P. What’s the deal?

My timing of reading various analysts opinions and listening to retail investor conference calls paid off this week. On one conference call, an analyst proposed a chronology for a series of events that will unfold in the next few months, all of which are calendared by our Congress to meet, discuss, and finally vote on raising the debt ceiling. After hearing this person give a detailed description of possible outcomes, including negative impacts on our economy and accompanying equity markets, it was clear to at least me that almost no event or no date matters at all anymore.  We have finally reached a point of information saturation.

What this actually means is that we may have arrived at a place where the fiscal cliff has morphed into a little hill and is, to quote a noted purveyor of economic forecasting,  “…a known unknown…that is; any additional information can no longer influence the markets…”  TMI (too much information) has numbed all of the public and most of our Congress. Very few care about important dates that previously indicated hard lines-in-the-sand by opposing politicians. Informationally, most agree that we are merely walking in the footsteps of similarly reported critical dates by naysayers and doomsayers regarding Greece’s debt issues.

Here we are today in a back-to-normal mode. Virtually everyone cares more about the upcoming Super Bowl, why Red John draws the smiley face on  “Mentalist”, or who will win the next American Idol. During the election cycle of 2012, some Americans appeared to care and a few may have even got to a point of beginning to understand the possible long-term consequences of the $16 trillion (and growing) national debt.  But rest well tonight, my friends. This subject has faded into the archives of useless information and is permanently filed under “what was that all about?”  When we all wake up some day much later in all of our lives, as Rip Van Winkle did after twenty years or so, maybe someone will dust off this file and bring it forth as noteworthy for discussion again. Until then…party on!

Are you normal?

       

A deep, dark secret that I seldom disclose to anyone but my closest friends and only after I have established a granular of credibility is that in college I majored in a social science: psychology. While many of my friends were learning how to differentiate assets from liabilities (accounting), pondering the accuracy of supply & demand (economics), and being confused by complicated year-end reports (finance),  I was studying how people behave or misbehave. I learned in Psychology 101 that while most people consider themselves “normal,” there are likely only a very few that are just that. After all, normalcy is derived from calculating the average (mean) of large groups of numbers, in which a mere handful of individual representations are exactly that product. Following the math, since so few of us can truly be said to be normal (average),  is it correct that most of us must then be abnormal?

Let us put aside for another time the debate that normal behavior could also be a representation of either the mode (highest frequency) or the median (exact center point of a range of measurements), rather than the statistical average (mean) of large groups of observed behavior. Now that we are thoroughly confused with the math of observing what is normal, perhaps we could agree that most of us are at least able to recognize what is NOT normal.  I will always remember PIMCO’s Bill Gross’  conclusion that global markets may be neither normal  nor abnormal, but paranormal.

2013 may seem paranormal to many of us; that is, it looks odd that the stock markets are calm, even positive about the final fiscal cliff conclusion…a slight income tax increase for a very few Americans combined with little-understood promises to curtail decades of spending growth.  It appears that the confusion about the importance of the fiscal cliff and lots of other geo-political issues have divided people into three identifiable investor-behavior groups: (1) those who have resorted to 1970’s-type saving…they returned their money to low-no risk instruments, like Bank CD’s. These people have been burned twice (2001, 2008) in the stock market, regardless of what they tried, and have “thrown in the towel.” (2) some have put the pedal to the metal and gone “all in.” That is, they have concluded that riskier choices are the only way they can reach their retirement goals and have abandoned risk-free options. This group seems willing to lose it all in lieu of settling for current low interest rates. (3) a few are seeking  professional financial advice to help them navigate the high seas of money management and are using old diversification strategies, but are including new tactics;  i.e.,  alternative ideas and products.

It may be difficult for us to agree about labeling these three respective groups of people as abnormal, paranormal, or normal. Let’s remember that what looks one way to one person, may look differently to the next person. Or to put it another way, “It’s all in the eye of the beholder.” How are you behaving this year…normally, para-normally, or abnormally?

The Fiscal Cliff

Impossible is the best word to describe the predictability of an eventual outcome. It is now not a secret that the current congress is not able to work around partisan differences and arrive at an acceptable compromise. Neither party is able to deflect all of the blame onto the other party, as both are not just firm, but immovable concerning negotiable issues. Certainly, neither is the President  budging much from his ideal platform which includes raising taxes only on the super-rich and no firm plans for entitlement cuts. So, here we are…in late December…with no deal in plain sight. This week, the domestic stock market is sending a quiet message by giving back much of the gains from the previous 358 days of 2012. Money managers are limping towards 2013 with nothing more than hope of a final compromise before January 1, 2013, when fireworks are sure to start if no deal is reached. Let’s see if the parties are able to swallow hard and sneak across their respective “lines in the sand” to deliver a sign of competence to fellow Americans and accompanying world citizenry.