Power and Money - An Exploration of the Role of Money in Mental Health

What is the relationship of money to mental health.  Or, what is the relationship of mental health to money.  Or even, perhaps, what is the relationship of power to mental health and how does one's relationship to one's own sense of one's net worth related to all this.  This is what we will explore next.

Bringing Sanity to the Brexit Meltdown

The markets around the world essentially collapsed in the wake of the decision Great Britain’s citizenry made to leave the European Union.  And, like my friend, Diane, who wrote on Facebook earlier today, any and all of us who have money in the markets – in 401ks or IRAs or any brokerage account – the sense is that her retirement outlook just got worse.

So, I make my living as a financial planner and a psychotherapist.  Some people think that’s an odd combination, but only a little thought would show that money and one’s emotional / physiological life are intimately related.   Stripped down to its functional attributes, money is about power.  And I define power as the ability to get what you want and/or need.  Looked on from this perspective, it’s easy to see that any diminishment of one’s personal power can and generally does, have a psychological impact.

Certainly this is not the place to dispense investment advice – if only because everyone’s financial situation and goals are so different – but there is something that I might say that could help my friends deal with the anxiety this seems to have engendered.

Anxiety is fear without an object.  This means you have all the feelings of fear, but don’t know where or how or when the threat will manifest.  So, you’re radically limited in what you can mount as a response.  If you see a truck barreling towards you, you can see and understand the threat and you can respond very specifically to get out of harm’s way.  What financial people – stock traders being the best example – have never really gotten a handle on is a proper appreciation of the role anxiety plays in market behavior.

In October, 1987, I was a stock broker when the stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin. The Dow Jones Industrial Average (DJIA) fell exactly 508 points to 1,738.74 (22.61%).  I was in Reno at the time, planning on getting married later that morning.  I recall thinking, “Those people in New York are have a panic attack!  They’re making each other crazy!” 

If fight or flight are the primary means of responding to threats, then surely flight is the preferred option with financial people.  The British exit from the EU is nothing if it is not about economic uncertainty.  Tune in to any talk show today or over the next few days and the common question, asked in a thousand forms is, “What does this mean for our economic well-being?”  And the answer – the real answer – is, “No one really knows.”  That “no one knows” is the heart of the anxiety.

In 1987, after remarking to myself about just how crazy the people in New York were behaving, I had another thought that has served me and my clients well for all these years, through all the financial crises we’ve seen, including the huge breakdown of Lehman Brothers and the fallout from that – the 2008 recession.  Creel Froman, a professor of political science at the University of California, wrote a series of books, all with the title, Language and Power.  There is a treasure trove of insights on power in these books, but the one idea I had in the face of these various financial meltdowns is Froman’s idea that “power always takes care of itself!”  If, as he argues, reality gets created in language, then whoever gets to say what is, is, is the powerful person at the table. 

So, whether you talk about Wall Street, or establishment politicians or corporate king/queen pins, we are talking about people who get to say what is is and Froman would say, these folks are not going to let anything happen that would deprive them of the privilege power can wield.

The economy wasn’t really in trouble in 1987 and so I thought, “we’ll be okay.  It’ll just take some time to sort this out.”  And, history confirms that this is what happened.  My clients who are close to or in retirement have a more conservative mix of investments then my younger clients who can invest for the long terms.  We rebalance regularly, so we sell when the investments have gone up and buy when prices have fallen.   

We don’t know what the fallout will be of Great Britain leaving the European Union.  That’s a significant reason to be anxious, to be sure.  But we can rest with a certain assurance that power will take care of itself – meaning in these instances that those in power will use that power to stabilize the markets, no matter what it takes such that while we may, indeed, see a drop in our 401ks, Pundits on Bloomberg are quick to say, “It's scary, and I've never seen anything like it, A lot of people were caught out, and many investors will lose a lot of money."  Well, we have seen this.  We’ve had depressions and recessions.  We’ve had world wars. We’ve had states come and go.  We’ve had all the scary things imaginable.  We’re humans – not gods, so it’s never been and it’s never going to be perfect.  This is not heaven.  Keep your head in your game.  Talk to your advisor.  Rebalance.  See a therapist if that’s appropriate.  But be assured, that sort of a nuclear war, we’ll find a way to muddle through to our next series of victories and the predictable unpredictable collages.  Be well

Madness, Violence, Community - Reflections on the Massacre of Innocents

Violence is a symptom.  The disease is variously powerlessness, insignificance, injustice—in short, the conviction that I am less than human and I am homeless in the world.

Rollo May

Power and innocence

A Search for the Sources of Violence

Human life begins on the far side of despair
Orestes

               With pundits and politicians now weighing in on what Adam Lanza’s massacre means and what we ought to do about it, I want to offer one psychotherapist’s speculations on the terribly sad event. 

Madness

               Bert Karon, an authority on the treatment of severely psychotic individuals, is a strong advocate of the idea that if you understand the psychotic’s particular existence from within the person’s subjective world, their behaviors can make remarkable sense.  So, I start with the supposition that while we may never learn exactly what particular and critical elements went into the Adam Lanza's murderous motives, can wonder out loud about this sad, sad event in Newtown, Connecticut in a small effort to make sense of the senseless.   We can start by asking the broad question, “What is the source of violence?

Violence            

                Rollo May, one of this country’s more gifted and brilliant psychotherapists asked this searching question in his book, Power and Innocence.  He began by pointing to the double meaning of the word “mad.”  It’s not accidental that our traditional word to describe insanity is “madness.”  We use the same word when we want to talk about everything from anger to uncontrolled and violent rage.  Karon’s consistent first coaching to the novice therapist treating schizophrenic patients is to make sure you say to them, “I will not kill you and I won’t let anyone else kill you.”  It's not only that the mentally ill person has an erroneous assessment of his current reality; it's more to the point that such a person frequently is walking around with the deep (and in many instances, justified) belief that the world is a terrifying, threatening place.  On the other side of this, May's argument is that violence occurs most frequently when an individual finds himself powerless.  Powerlessness is another word for helplessness or utter ineffectiveness in social situations.  Power is always interpersonal; if it is only concerned with the self, then it properly deserves to be called strength.  And anyone who has ever been completely stripped of power as one of the parents observed--especially when what is at stake is of central and crucial importance--it's a state way beyond frustration: it's true madness.

       
             
Speculations

       
             As a preface, in an attempt to ground these speculations, let us return to Rollo May's Power and innocence.  A core idea May puts forth is that violence is directly connected with an individual's struggle to find sand hold onto some self-significance.  In common parlance, we might say the powerless person is constantly fighting off the constant fear that he a loser and especially a nobody.  By way of developing and illustrating this idea, May recounts part of the story in Herman Melville's novella Billy Budd Foretopman.  Quoting May directly

Billy has only one obvious flaw, which none of us would call tragic, but only human: he stutters when his emotions are strongly aroused.  On the dark, hot night when Billy is sleeping on deck, one of the crew approaches him and asks his help in planning a mutiny.  But, like all good-natured persons who hate to hurt other people's feelings, he did not come out with a radical "no" and would not have ever considered informing on a fellow shipmate.

Billy is then denounced by Claggart (the master-at-arms) before the captain as having planned the mutiny and is called to defend himself.  As Claggart repeats his accusations, Billy is so flabbergasted at the injustice that he stammers and cannot say a word.  The captain cries, 'defend yourself, man,’ and then, seeing the sailor's impediment of speech, he adds: 'take your time, my boy.'  But this fatherly concern makes Billy speaking block all the worst.  In his impotent rage, all Billy's passion goes into the blow that kills Claggart. Billy Budd, at his trial, exclaims: "If I could I have used my tongue, I would not have struck him."[i]

So now, with all this in mind then, entertain with me the following possibilities:

A former classmate of Adam Lanza told a TV reporter that he remembered that Lanza was a very intelligent young man, would answer questions that the teacher would put to him, but when he did answer, "it was as if speaking was very painful for him."  Other classmates suggested that he wasn't bullied; he was given his space.  Paradoxically, being completely written off can be as destructive as being actively bullied!

In a variety of news reports, we learn that Lanza's mother was "high strung," "rigid," and "a gun enthusiast."  What happens when we translate these words into a clinical language?  Might "high strung" mean anxious?  Might "rigid" point to a certain quality of obsession or compulsion?  And might being a "gun enthusiast" be a more socially appropriate way of speaking about being utterly paranoid or at a minimum, seriously feeling some threat?  Entertain these possibilities for a moment and then consider what it might be like to grow up being Adam Lanza.  In my clinical experience, I've noticed that the first born children generally identify with the more powerful parent.  Let's allow that this might be the case and that the older brother, Ryan Lanza, identified with his financier, executive father.  Allow for the moment that Adam Lanza's identification fell, by default, to his mother.  Then, finally, let me suggest a scenarios in which Adam's mother externalized her own emotional struggles and interacted with her son as if he was a dangerous, compulsive and paranoid kid because it was psychologically easier to handle her own unwieldy and wild emotional and mental states if they were out there, rather than in here.

Imagine a boy growing up with a very frightened mother; a woman who has to deal with a child who is very much like her: high strung, rigid interested in guns.  Not possessing the presence of mind to see that she she may need help for her serious problems, she simply goes about the task of trying to control a highly sensitive and uncontrollable child.  Imagine also that in struggling with her own insignificance, she highly prizes social prestige and community standing; she has a prize garden and is very active in community activities in her small town.  Let's further wonder what might a child become, if we add to this mix, a mother very much in need of keeping her less than socially-perfect son invisible to the outside world? The contrast between that level of invisibility and the attention now given to him in his death is striking.  (In this sense, it's a bit simplistic to argue that the first step in addressing mass murders is keep the media from broadcasting the names of these people.)  Could you imagine that a mother such as I'm creating might come to hate her own child, all the while denying it to the child, himself,even while the child mirrors back that hate?  Would that mother be hated even more by the boy if he held her as the cause of his ultimate savior, his father, being sent away from the home?  And on that fateful morning is it so impossible to imagine a mother and son standing there, hating each other and each threatening to kill the other person; both of them completely swamped in their own complete impotence--the absolute and hostile gulf that separated them? 

            And having now given free rein to my own speculative associations, I must also emphatically add that I am fully conscious that none of this may have anything to do with the truth or reality.  As Andrew Solomon details in his new book, Far From the Tree, when one the Columbine killer's mother's heard that the killer might be her son, she had that insane first thought that if it really was her son who had carried out the attack, she could only pray "that he got killed before he hurt any other people."  So, enough disclaiers: these are just my speculations. 

Community

Speaking about the deaths of these first grade children, Dr. Drew astutely observed right from the earliest coverage that this mass murder involving innocent children made this a game changer.  President Obama also hinted at this in his first pained remarks and his remarks to the victim's families Sunday.  But in a psychological and cultural sense, I wonder if the matricide may have even more implications for our society.  In Aeschylus's ancient Greek, prize-winning tragedy, we have the central character, Orestes killing his mother, Clytemnestra.  In the wake of this murder, he is relentlessly pursued by the Furies.  We learn that this was a killing to revenge his father's death.

As May and others tell us, relentlessly hounded by the Furies, at the point of madness, he collapses at the feet of Apollo, his protector and appeals for relief.  Apollo suggests he direct his appeal to Athena.

As the mediators between aristocrats and the common people, Athena was seen as greater than Apollo because she used male and female values being brave in battle and skilled in the arts of peace. Above all she was the goddess of moderation, restraint and the arts of persuasion.  For variety of reasons, Athena immediately announces that in this case, ten mortal men of Athens must act as a jury of peers. The Furies proceed to argue that without fear, mere mortals would not have the deterrence of law.  And without loyalty, humility and respect to kin--where all law and punishments lost, cultural chaos will surely follow. Apollo argues that Orestes' duty and to honor must be properly taken into account.  So, the jury casts its lots. They come out equal, five to five. Athena then casts her deciding vote for Orestes, and, as the Furies rise to a new crescendo of recrimination, threatening to blight the whole state of Athens, Athena serene and measured in her tones, works the art of her persuasion. The Furies have not lost, she tells them. The vote was even. What she proposes is a new order in which they will share power with her and with men. Justice must reign now in the heart of each person. Because no person or state can live without respect or fear for authority, she asks them to visit their punishments on those who offend against the due processes of law and democracy. The Furies are transformed by this acceptance, as reason and emotion find a new integrity. They are turned into the Eumenides, the 'Kindly Ones', and, throwing off their black robes, dress themselves in the crimson of the harvest festival.[ii]

 Orestes is exonerated. Aeschylus finds justification for matricide!  In this he finds himself in agreement with  Bert Karon, who long believed that early and repeated rejection by our primary and intimate caregivers can lead to madness.  And always as he talks about this, he is quick to caution that we should not be so quick to demonize the parents, who, themselves, may have been everlastingly traumatized in their own lives.  Still, as Alfred Adler, the oft times forgotten co-founder of psychoanalysis, asserted: the mother’s primary psychological task is to teach her infant to be a socially-contributing individual; to separate from that maternal dyad and engage creatively and constructively with one’s culture and the world.  On the other side--speaking about what constituted mental health--Adler believed that mental health was directly correlated with the capacity to be a responsible member and contributor of your community.  For him, it is that simple; that direct.
     
            At a holiday caroling party over the weekend, I had a very interesting conversation with a former financial planning client / friend, whose questions contributed to the richness of our discussion of the Sandy Hook Elementary School tragedy.  One such prompted me at one point to remark that Rollo May was fond of saying that it was not unusual for patients in analytic treatment to serve something of a Cassandra function, that is, they give us early warning about a problems that will break out, wholesale, in the larger culture at some point in the not-too-distant future.  Adam Lanza's horrendous actions raise the possibility that if we continue to raise self-centeredness, "egocentricity" to borrow Adler's and May's words, as our cultural ideal for indivudals, we're well on the road to destroying each other and our culture.  In response to my friend's question as to why it was that our culture was so focused on the self, I answered, "certainly, in part, it can be traced back to living in a culture of advertising that directs all it's appeal to feeling special about your self.  And in a different way, in a way that's been largely invisible, it's a byproduct of our transportation culture.”  It's something to see, I went on to say, that on the one hand, all if the media emphasize  sense of community in Newtown before and especially in the wake of their profound losses.  On the other hand, if you're been out on the road since Friday, you know it's still a dog eat dog world on the interstate highways.  We seem to have little, if any, relationship to the people in the other cars; they're just competitors; they don't matter and so forget them.  I'm in the habit of quick;y flicking my lights when a car or SUV pulls in front of me without signaling her intention.  For a while, I did it because I didn't like being treated like I didn't count; that I was invisible.  Nowadays, I still don't like that feeling of being made invisible, but I'm shaping my intention to send a quick visual maker that I see them; I acknowledge their presence.  Our indifferent behaviors on the roads, to my mind, point to my concern that we are rapidly losing even the idea of a communal relationship as something essential to our mental health.  Growing up when I did on Manhattan Avenue in New York City, all the mothers on our block had authority and responsibility for all the children playing in front of them in the street.  I'm sure, though I can't remember any incidents, that sometimes squabbles arose because of this system.  But what I can say with sureness about that time and experience is that, as children, we all were aware that we were seen and what we did mattered to all of those parents sitting on the stoops.  I don't doubt at all that there are communities, perhaps like Newtown, where people's lives unfold in a web of powerful, interdependent relationships with their neighbors.  One of my clients who had a serous medical condition suddenly arise would be the first to attest to his neighbors coming to his family's support.  But even in that town which is held up as a model of what community might be, there still was this Lanza family that was invisible in a deep sense of the word.  That's not an accusation.  Shaming victims is its own act of violence.  Following May's prescription, I am inviting each of us to hold a mirror up to our own faces; me included--especially me.  I used to have a holier-than-thou attitude about other drivers on the road until I was confronted by a driver, a courageous  young woman who confronted me as I parked and didn't at all like my New York style of driving, which for her, felt more like NASCAR tail-gating than civil road behavior.

       
                Yesterday, on my way back into the condo complex I live in, I noticed our flag flying at full mast.  I parked my car, got out and took ir upon myself to lowered the community flag to half-mast.  It was a small symbolic gesture to connect my community with other people in other communities throughout the country feeling a similar sense of loss and sadness.  I can’t remember who in my education once speculated that with the Cold War over, we as a nation now ran the risk that all our anger and hatred we could safely project and direct on Russia might be turned against ourselves, surely meaning, against each other—our neighbors. We may be witnessing the reality of that in Lanza’s barbarous assault.  And a fate such as this, like a powerlessness to alter climate warming, can only fill us with despair.  We can do no better than  Orestes in his view that human life begins on the far side of despair.

       
                May’s last chapter in Power and Innocence is aptly entitled “Towards New Community.”  He starts off questioning the variety of proposals that are advanced to alleviate violence in our culture.  Blaming it on the media, which in our day would also include video games, forgets the fact that our cultural history includes the massacer of children at Wounded Knee in 1890.  I grew up when TV had good cowboys and bad cowboys all carried guns and it was "normal" to use them as a preferred way or if not a preferred way, then certainly the ultimate way American men had in solving conflicts or bringing about justice.  So, it's lame to simply lay blame on the doorstep of the media.  May then offers a rich appreciation of the various words connected with community: commune, communion and even communism.  He bridges this exploration of communication with the story of Billy Budd and his inability-- his powerlessness-- to communicate.  He tells us

Violence is a symptom.  The disease is variously powerlessness, insignificance, injustice—in short, a conviction that I am less than human and I am homeless in the world.  For a convenient shorthand, I have called the disease, impotence, fully recognizing that violence also requires for its triggering some promise, a despair combined with the hope that conditions cannot but be bettered by one's pain or death.

He presses on to articulate a very finely nuanced argument for the acceptance of the good and evil that we are all capable of being and doing.  In a different language, I might say that he's urging us to not deny our own human capacity for hostility and injury to others, even if it's something as small as not signaling your intentions to your neighbors on road with you.  He ends where he left off in his previous bestseller, Love and Will.  Love, care for others is so central to living in a world made for both joy and woe.  In this he goes beyond and adds to what Adler had in mind when he talked about having an interest in the welfare of those in our community.  He wants us to become strong, assertive selves, to acquire power and then to use this power to build authentic communities.

               May ultimate answer to the problem of violence is to give a voice, to share power with the voiceless and powerless of our society and culture.  He also speaks out strongly for cultivating compassion and understanding.  This we can begin to do if  we are willing to confront, in our humanity, our contribution to the breakdown of community.  We may not be able to forgive our enemies, he suggests, except as an act of grace.  But we may be capable of understanding and on the basis of this understanding, come to a place of compassion.  In a remarkable way, in a way that our times so badly needs, Rollo May sought in his life and work to serve as America's cultural therapist.  In his very last writings, he spent a great deal of energy arguing for the importance of myths. He believed that the myths born in the Renascence that have served as ethical and value beacons for centuries were dying, or had already have become useless.  In our time, we are all existentialists,no matter what faith we may or may not believe in.  911 and the depressing events of the past few days provide convincing evidence that tragedy can occur in the next instant, no matter what our station in life is, or what God we may believe in.  We each must navigate the separation from mother, grow beyond the maternal bond and learn to become a person capable of fulfilling his duty to himself and his fellow human beings.  This and a healthy sense of humility are all elements of maturity for an individual and a culture.

            Allow me to end by recalling the great social reformer of the 19th century, whose 200th birth date, we celebrated earlier this year, namely Charles Dickens In his fabulous Christmas Carol, he has Scrooge's nephew, Fred, carry the message far better than any of my efforts.  In response to Scrooge's assertion that Christmas had never done him any good, Fred replies

‘There are many things, from which I might have derived good, by which I have not profited, I dare say,’ returned to nephew: ‘Christmas among the rest.  But I have always thought of Christmas  time, what is come round--apart from the veneration due its sacred name and origin, if anything belonging to it can be apart from that—as a good time: a kind, forgiving, charitable, pleasant time: the only time I know of, in the long calendar of the year, when men and women seem by one consent to open their shut up hearts freely, and to think of other people below them as if they really were fellow passengers to the grave, and not another race of creatures bound on other journeys.  Therefore, uncle, though it has never put a scrap or gold or silver in my pocket, I believe it has done me good, and will do me good; and I say, God bless it!’

               Dickens, in his own humanity and wisdom, takes pains to remind us that we are "fellow passengers the grave, and not another race of creatures bound on the other journeys."  The sad events of this past week only drive home the point more poignantly.  As a culture, we can do better in recognizing that understanding and creating mental health for ourselves and our culture should really be one of our first priorities.  And we might begin that by wondering why it is that most medical insurance policies offer such meager benefits for psychotherapy.  If we are to regain our standing as a great world culture, to my mind, we need to become a mentally healthy culture.  As our hostess offered as a meditation for each day of the coming year, during this festive season, "Enjoy your blessings."    

---

Rollo May, Power and Innocence – A Search for the Sources of Violence, New York: W. W. Norton and Company,

Inc., 1972.

[i] http://bridgeacrossconsciousness.net/mindmaps/NewMaps58.pdf, “The 'Oresteia' and the Myth of Democracy.”

Alfred Adler, Social Interest, and Our Current Political Landscape

      I've always been disinclined to express in the public domain my political leanings.  Partly, I imagine it is because, as a therapist, we're trained to be neutral in our interactions with our patients.  More, as a financial planner working with some rather wealthy individuals, I've entertained the fantasy that many of them are Republican and might take umbrage at anything that would suggest that I had liberal, Democratic loyalties.  But I've recently been reading a great deal of the work of Alfred Adler.  As some of you may know, Adler was right there with Sigmund Freud in the development of psychoanalysis.  Classical Freudians have historically spoken of Adler, being one of Freud's disciples.  But even a superficial reading of Adler will inform you that not only did he not think of himself in this manner, but biographers who have looked into the matter, have also agreed.  From early on in his career and his association with Freud, he brought his own unique way of seeing the world psychologically.  When they broke from each other, in 1911, the issue that constituted the unbridgeable gulf between them pertained, specifically, to Adler's commitment to the future as the primary motivating force in the development of each individual's psychology.  In fact, so important was this notion, that Adler called his school, or perhaps better said, his system of psychotherapy and psychoanalysis, Individual Psychology.
     In his last major and definitive statement of his position on mental health and mental healing--a book titled Social Interest--Adler asserts that the measure of the person sanity can be measured in their capacity for social interest.  This notion of social interest was developed while still a psychiatrist and psychoanalyst operating in Vienna prior to World War II.  Phyllis Bottome, one of his earliest biographers and very likely the biographer closest to Adler, takes pains in her biography to explain that social interest, as a concept, really might be spoken about as community feeling.  The essential quality of this notion is that the individual through an adequate training (first with mother) and development  comes to deeply appreciate that she or he is fundamentally dependent upon his or her community for her or his survival.  For Adler, this is no simple theoretical matter.  In The Problem Child, Adler says
   
     "What conception of the world are we going to adopt to replace the one that seems false?  In the chorus of voices you will hear advocates of conceptions of the world which are national, religious, European, or Asiatic.  We are not prejudiced against any of these.  What we demand is that you take a form leading to a conception which include social feeling; this is the philosophical conception of Individual Psychology."

What Adler is here asserting is the belief that the measure of a person's mental health is to be found in his or her capacity to operate cooperatively and collaboratively with all the humans.  The problems that children have, as detailed in his little book on problem kids, all point to some disturbance in the child's capacity to take another person's point of view into consideration.  Certainly one can see that, taken to an extreme, Adler is talking about individuals who developed narcissistic personality disorders.  But he also includes individuals who have a variety of organic disorders that might color how they see the world as oppressive, and thus, take a stand against a world filled with oppressors.  And then obviously, Adler includes children who are hated or, who discover themselves as ugly or deformed.  For these children, Adler held that in discovering that the world rejected them – – that is, had no social interest in them – – they in turn, would stand in opposition to that world.

     Adler, while always pointing to the developmental history of children as the base from which he made most of his assertions about human psychology, saw himself as a person who had to live out his theory and not to just talk about these ideas.  Today, we take public health, mental health and child guidance clinics as simple matters of fact.  Few know how central Adler's work in Europe was in starting this movement and fostering its evolution.  From early on, even while sitting at Freud's table, Adler was a social democrat.  For Adler, being a social democrat meant carrying one's beliefs about the community feeling into action.  And he was forever preaching the gospel of individuals' actions over individuals' words.  With this as our preface, let us turn now to our current political landscape.

     In many ways, the contrast between Mitt Romney and Barack Obama is simple and clear.  Romney sees himself, philosophically, as a capitalist.  Obama, though there are 50 shades of gray here, operates as a community organizer.  This is not to say that Romney doesn't have an altruistic bone in his body.  Some of the stories that came out during the Republican convention about his work with individuals certainly suggests the quality of social interest we have been speaking about here.  But the point I might suggest is that we are looking at individual acts of charity directed largely to individuals and families belonging to his Mormon church.  On the other hand, Obama's life work suggests that his fundamental orientation is about building communities that work.  When some analysts has looked at the contrast between Obama and Romney on international matters, they will characterize Obama as wanting to develop stronger ties with the various European counties.  Clearly we see that this was his preferred strategy in responding to the spring uprisings.
     And in a more recent episode, where Romney was secretly taped speaking of Obama loyalists as being individuals looking for a handout rather than a hand up, we again see the stark contrast between the capitalist and the 19th century notion that we pull ourselves up by our own bootstraps.  And in many ways, 20th century America was largely built, ideologically, by the advertising industry, which very much wanted to foster the notions of individual satisfaction, even at the expense of ignoring the social consequence of discarding a community orientation.  Adler points to a way of being that provides a natural bridge between the capitalist worldview and the community organizer.
     On every page of Adler's writings, we discover that the base of all of his thinking is this clear recognition that human beings, tooth for tooth and claw for claw, are the weakest creatures in nature.  Our everyday language, which owes its origin to Adler's thinking, speaks of how human beings must, in the face of nature, assess ourselves as among the weakest creatures on the planet. Human beings, to survive, developed a high-capacity for creativity, language and community feeling.  Adler  sees this human capacity for creativity as the arena in which we might give full expression to our competitive nature to strive for the ideal form, be it a tool, a quality of life, a sports team or company.  He then goes on to say that the litmus test of this ideal form must always turn back and look at the community.  Will what I am doing or creating contribute to social interest or a community feeling?  Competition, split asunder from social interest, is fundamentally narcissistic.  Social interest, divorced from competition is fundamentally socialism or the emergence of the welfare state.

     While the Democrats assail Romney for his lack of connection with the poor and middle class, the Republicans assail Obama for turning his back on competition.  What neither seemed to see is capitalism is not the problem here; only the bastardized form of narcissistic greed and avarice are.  The integration of competitive capitalism directed to the creation of and support of strong community, which ultimately must also extend to include the world community is the best path forward both for each individual, for our country and for our world. It's what the artist, John Lennon had in mind when we wrote, "imagine there's no countries.  It isn't hard to do.  Nothing to kill or die for . . . Imagine all the people, living life in peace." That's what Adler had in mind when he spoke of community feeling.
   

Well, The Sky Has Fallen

Well, it’s happened. The financial sky has fallen. The good news is that it hasn’t crashed into the earth yet . . . it’s just fallen. And the next big question after the one that asks, “How does this affect me?” is, “What does it mean to say “the sky has fallen?’”

First of all, the little noticed headline that I read on the financial pages today was that Citigroup was purchasing Wachovia Bank. Think about this for a moment: If the sky is falling, why would one bank buy a bank that would have likely collapsed and been taken over in a few days or weeks? Well the answer is a simple one: Citigroup believes that when the dust clears, there is serious money to be made. They are following John Templeton’s advice to buy the market at the height of the Depression.

But what does it mean that the sky has fallen? Well, first and foremost the sky is the credit markets. When General Motors has to pay their payroll at the end of the week, and they look to see if they have enough and don’t, they call up the man at the money market fund and ask, “Can I borrow $338,000,000 until the end of the month when the dealerships send in their payments for the cars they bought on the 90 day net plans?” And up until most recently, the money market guy would say, “That will cost you 2.57%; okay?” And the GM guy would say, “Great. Will that money be in my account tonight or should I count on it for the morning?” This was and is a conversation that took place thousands and thousands of times each and every day the commercial paper market was open (commercial paper is how these people talk about the bonds that make up money market funds).

Over the past couple of weeks and especially after the collapse of AIG, two critical things happened that made the Treasury executives go crazy. The first was that for the first time in my 28 years in the financial world, a money market fund “broke a buck.” This means that a money market fund said it would pay money market fund holders less than the $1 it had put in. This is something worse than mortal sin. Not only do you have to go to hell forever, you also undermine the commercial paper market. Now the possibility exists that you could put money into a money market fund and not get back your full principal. Under these circumstances, getting money for short term purposes now became anything but routine. Now the possibility existed that banks would refuse to loan money to other banks and commercial paper lenders wouldn't lend money either. Without this capacity to have short term money move, you had what is generally been referred to I the press as a “liquidity crisis.”

What makes this so perilous is that without liquidity, the economy stops. Your credit card doesn’t work when you go to buy makeup at Walgreens and car loans dry up and mortgage loans dry up and payrolls get missed and stores don’t restock shelves. You’re beginning to see the chaos beginning to appear when you start multiplying this across the society and then throughout the world!

The Treasury’s response was to cobble together a plan whose design was to restore trust in the marketplace by taking away all the bad loans on the balance sheets of banks and investment companies. That way, if I now make a loan to a troubled bank, I can know with assurance that that bank is not going to go bankrupt very soon, and so, there is a good chance that I wouldn’t have to stand in line to get paid back after the bad loans get covered. It would be safe to loan money again. Why $700 billion? Because it’s a very large number…enough to convince the markets that there is no bank and any number of banks or investment houses that it could not prop up. The world would be safe again to make loans.

Well it didn’t happen again today. The markets crashed . . . that’s a fair rendering. They crashed . . . 770 points on the Dow is a crash in my book. Now the question is, “Can the sky be raised again?”

I have found myself, more than one this week, thinking about my intellectual pal and mentor, the great Creel Froman. Most people I know never heard of Creel, but I’m on a first name basis with him. He has a 3 handicap on the golf course which is pretty darn good for a California professor. Creel started his career looking at all the rules Congress uses to game the system to their needs. He eventually found himself at the University of California Davis and with the support of his department, he took time to write a series of books—eight I think so far—titled Language and Power. The main thesis of this work—all 8 books—is to establish, without any doubt, that all of reality comes into being by the application of power. Whoever gets to say what is, is, is powerful. Following me so far? So the House Republicans, by not delivering the votes they promised at the start of the day got to say, “Today, we will not pass this bill. That’s "what is so" at the end of the day.” They got to say what the is is. Yes tehre were Democrats voting "no" as well. The difference is that the Dems delivered the promised votes.

Froman also has one other message that he argues, elaborates and illustrates way past the point where it becomes an irrefutable truth: Those in power (Creel refers to these individuals simply as “Power”) use their power to insure that the “distribution of that which is most desired” always favors them. In other words, in Creel’s shorthand way of saying it, “power will always take care of power.”

In a paper I delivered to the psychotherapy community last Friday, I spoke to them about how to bring sanity to their clients’ lives. I mention it here to help you look to see what you need to do to keep yourself sane. Once again, let me again drive home the primary message I keep telling my clients: stay on purpose with your asset allocation program; balance to keep on track for your percentage in interest earning and equity investments. Also, pay attention to the things you can do something about; the amount you save, the place you live, credit or cash.

The comfort I suggested to my psychotherapy colleagues was to really get the importance of the law that power will take care of power. The sky will get propped up one way or the other. You and I may and likely will see a variety of changes that we will not like. Who do you think is going to pay for this? Power? And how will we pay for it? Nether presidential candidate in their debate wanted to even get in the same universe with the word, but you know that you can either print money and drive inflation to the moon, or you can raise taxes and put that burden on the largest tax payer group: the middle class or, more personally, your back. Guess which one is likely to happen after the election no matter who gets elected? This may have some serious implications in terms of what we might want to do in taking out IRAs and converting them to Roth IRAs as much and as soon as possible. Just a tip.

I’m in the same boat with you. I wasn’t planning on retiring any time soon anyway so that’s not big issue for me. The crisis is really about time, more than money. It is going to take time, no matter what the bailout plan ends up looking like, to get back to a time of prosperity. It will. As Froman so perfectly understands these things, power is housed in institutions and the financial institutions will be shored up, propped up, held up and made to survive and as this aircraft carrier of a global economy gets turned around in that direction again, we simply have to allow that time to unfold, doing what we can to use everything available to cover our little worlds while the Titans throw billions and billions around like so many toy cars.

Every good wish,

Michael

Origins of Our Current Crisis

Is this foresight? A regular Cassandra. Check out this blog posting I found while doing research for my next article. It's from November, 2007 by The New York Crank (that is not me). I want to say more about this later, but for now, check out the original article.

The New York Crank: How to keep the whacked-out Bush Administration's free enterprise purists from plunging us into the next Great Depression: "You are absolutely right about the very dangerous consequences of the repeal of the Glass Stiegel Act, as well as the repeal or lack of enforcement of other New Deal measures that protected our economy and consumers for the last several decades. The most recent example is the repeal in 2005 of the Public Utility Holding Company Act of 1935. These laws were passed to prevent the recurrence of economically disastrous activities of banks, utility companies and others that led to the Great Depression Over the last several years, they have been derided as antiquated statutes that strangle the economy. In reality, they were providing needed restraints on corporations that left to their own devices and driven by their own greed could destroy our present economy just as they did in 1929. This is precisely what we are witnessing today."

Anxiety on Main Street

September 16th, 2008

It’s no small thing when two of the very pillars of Western capitalism bite the dust in one weekend! It’s really a big deal and if you haven’t been paying attention, I’m here to tell you that you should. And let’s not forget that the giant insurance company, AIG is still tottering and were it to fall, we may be in territory we’ve never been in before.

Lehman Brothers has a long and venerable history. It grew to have billions and billions of dollars in assets—not the money of its clients, mind you. That money is pretty safe. But they are not too very different from banks in taking money in and using it to make more money for itself. Only brokerage companies are not supposed to commingle client funds with company funds. So when Lehman Brothers goes down the tubes, one of the really valuable assets that it has (and certainly this is also true of Merrill Lynch) is that they have retail accounts with billions and billions of dollars safely tucked away in them. This doesn’t mean that if you had a brokerage account, for example, that had only Lehman Brothers’ stock in it, you wouldn’t be in big trouble. It only means that these thousands and thousands of accounts with assets deployed in all sorts of investments are cash cows. The brokers of these accounts call their clients every day and say, in so many words, “Sell this and buy that.” And for so many ill informed clients, these recommendations are followed even while the broker has a huge conflict of interest: if he doesn’t sell and buy investments, he doesn’t get paid. So, as far as Lehman Brothers’ assets are concerned, being able to sell this “book” of client accounts is a big thing. So the first lesson here is that even though brokerage companies go down the tubes, generally speaking, your money is relatively safe.

But the real issue with Lehman Brothers’ collapse is that we now clearly know with certainty that there are still some very bad loans on the books of a variety of very large companies, like Washington Mutual Bank. What his means is that in the event of additional collapses, the average person in the street comes to the obvious, but erroneous conclusion that the entire financial system will fail. We know, historically, there have always been “unforeseen” events that arise that totally jolt the market irregularly appearing, but also regularly appearing, meaning, you don’t know exactly when or what will trigger these financial crises, but they always come along. So, Lehman Brothers’ collapse, Merrill’s sell off to the Bank of America and AIG’s pending collapse sends panic to the person on Main Street and his/her natural reaction is to grab what money is left and head for the mattress to hide in under!

What the best and brightest of my colleagues are telling their clients is to keep your focus on your existing investment strategy. What this means is that the Asset Allocation model of investing is built specifically for situations like this. We set your mix of equities (stock mutual funds) and interest earnings (CDs, corporate and government bonds and bond mutual funds) and then wait and see what the market does. It the equities market goes up (prosperity) we sell some of your equities and move them to safe interest earning accounts. If the stock markets go down, we tap into our interest earnings accounts and buy enough equities to restore our balance. This means that you are buying your stocks at a discount and selling them for a profit—the way it’s supposed to work. And the financial planner is the guy who gets to twist your arm on both sides of this structure. He or she has to convince you to sell when everything you own is going up and buy when everything is going down.

So as I approach the year end with all of my financial planning clients, as well as my own money, as we do our year-end investment strategies and tax planning meetings, is to prudently look to take some of the tax losses where appropriate for the tax benefits. At the same time, I'm planning to buy some replacement and new equity investments to bring these portfolios back into balance. So that’s it: don’t get caught up in the herd mentality here. Be disciplined; keep the long term view in mind. Do your balancing.

Here’s a nice link to a page on the New York Times that gives a healthy perspective on all of this:

http://www.nytimes.com/2008/09/16/business/yourmoney/16consumer.html?ref=business&pagewanted=print

As ever, with all good wishes,

Michael