The Current Recession and Bubbles

In my view, the last two pages of Boomerang summarize the whole financial collapse. A consulting psychologist describes the recent series of escalating bubbles as the result of the structure of the human brain.

The oldest part and the foundation of the human brain is the Amygdala, the equivalent of a lizard’s brain.

This lizard core is dominated by survival needs such as  food, sex, fight or flight, its’ needs are unlimited and beyond reason, essentially ‘greedy’ for anything it desires.

Above the Amygdala  is the Mamilian layer of the brain consisting of maternal concerns, social interaction, civilized and humane capacities.  And finally, above all is the frontal cortex, memory, reason and the ability to compose abstract thoughts, self reflection.

Unfortunately, the modern post-industrial world can deliver any product, service or experience almost as quickly as the Lizard Brain can desire it.

And so we live in a world of accelerating reflexive desires, lurching between bouts of lizard fear and greed inspired by sophisticated advertising and instantaneous ‘News and Information’ designed to provoke even more responses or at least keep us tuned thru the next commercial.

The Boomerang Psychologist says that the Lizard Brain can never be satisfied and is volatile enough to eventually and always overpower reason.   ‘Where there is a will, there is a way.’

Or perhaps a better way to say it, ‘with enough money, guns and lawyers……. anything is possible.’  And so, here we are in Recession 2011, victims of our own Lizard Brain greed, civilization circling the drain.

There were many other wonderful descriptive phrases about the various ‘sovereign nation fiascos.’
Here are some paraphrases of the author – Iceland is traditionally a land of fishermen.

And since fishermen are by definition, optimistic, it follows that when the Icelanders were left alone with rooms full of easy money in the last decade, they decided to venture out across the seas and purchase as much of the world as they could.

Iceland had finally hit the ‘happy hunting ground,’  borrowing all that the world would lend them to spend on enterprises far and wide, whether they understood them or not.  That’s optimism.   And also, eventually, bankruptcy.

The Irish, when left alone with rooms full of easy money, also discovered that they had a knack for spending other people’s cash, and thus strode forth from the pubs to also became ‘Financiers.’

However, instead of wandering the seas of the world in search of lucre like the descendants of Eric the Red in Iceland, the Irish confined their shenanigans to their Emerald Isle and decided to buy and sell everything on it to one another, over and over again, at higher and higher prices until at last, there was no money left.  And thus bankruptcy.

The Greeks and Spain.   All that Sun.  Black olives.  Singing and dancing, and eating.  Why work?  What fun?   The Germans, forever jealous of the carefree Greeks and Spaniards, sought to show the world how carefree and generous Germans could be too.

And so the money flowed south.  But the Greeks and Spaniards were often drunk and not in the habit of working so hard but having so much fun that there was no time for  accounting.  And so eventually too much money was spent.  And thus, bankruptcy.

Outwardly the Germans  are the epitome of cleanliness and order.  But inwardly, as if to compensate and attain cosmic balance, the Germans love ‘shit.’   It’s blunt but that simple.  And so the best customers for all the shit that the New York  banks sold – were the Germans.

So long as the Structured Investment Vehicles, CMOs and CDOs were rated AAA on the outside, they could be full of shit mortgages, shit notes, shit bonds, shit deals on the inside.

One of the foreign customers who lost Billions on Lehman Brothers deals said, ‘Lehman had testicles everywhere…..,’ maybe that sums it all up and helps explain, along with the ‘Lizard Brain,’ how this monkey money business happened. We have only ourselves to blame.

Boomerang by Michael Lewis and reviewed by Nick Wells