Irrational bubbles, bursts and bailouts

The economy that's spiraling into a deeper recession each day appears irrational to me. It took over spending, over consuming, and excess borrowing to inflate such a big bubble. We don't get carried away with ourselves like this when we are being rational. Instead, we are discriminating, selective, keeping our perspective, balancing our ambitions, making tradeoffs and considering long term consequences.

I utilize many different models to understand irrational behavior. Here's a brief summary of those frameworks to set up our exploration of possible solutions:
  • * Limbic hijackings: The field of emotional intelligence imagines our more primitive limbic system overriding our self restraint, better judgment and situational awareness that our neocortex could provide. We go into episodes where we are not in control of how emotional we get. We become dangerous to ourselves and others in ways we will live to regret.
  • * Panic attacks: When we're in danger, we resort to our survival instincts, fight or flight reactions and paranoid suspicions. If we're not frozen like a "deer in headlights", we're making snap judgments and acting accordingly. We're manufacturing more anxiety than we can handle and thus need to take our frustrations out on others quickly.
  • * Emotional baggage: Our unconscious minds function like seismic recorders which get imprinted with traumatic losses, setbacks, failures and crises. We remember how helpless we felt and how powerless our conduct seemed. We internalize this trauma as a baggage about how the world work and what always happens to us in particular. We reenact the trauma we're desperately trying to avoid while maintaining the deep belief that it cannot be avoided.
  • * Psychological complexes: When we're possessed by an inferiority or persecution complex, we feel justified in getting even with others who wronged us. When we're possessed by a power or messianic complex, we feel righteous about abusing others we hold in contempt. When we're possessed by a trickster or clown complex, we think we're only joking around when we're having a devastating effect on other's feelings, confidence and sense of belonging. Some would say we're showing signs of demonic possession or psychosis.
  • * Finger pointing: When we're unhappy with our own shortcomings, we can find those faults in others instead of ourselves. We may act out our unresolved issues, dish out what we cannot take in like measure and show others "a thing or two" we need to learn ourselves. We shoot the messenger who tells us "we're the problem" and blame those who see the truth for being at fault.
  • * Obsessive/compulsive behavior: We can become driven to excess, insatiable pursuits and relentless striving. Our thinking become unreliable by adopting flawed cognitive strategies. We maintain denials, distortions and convenient explanations instead of facing the facts. We "idealize, awfulize or catastrophize" what is more reasonable and complicated than we assume.
  • * Alter ego: When we form an identity, we must exclude what we decidedly are not. If we make a thing of success, we're devastated to be associated with failure. If we identify with being loyal to a family, we despise free spirits who seem traitorous, rebellious and selfish by our standards. These outcast traits form our alter ego that occasionally get a hold of us and run the show. We cannot believe what came out of our mouths, came over us or came to mind as the right thing to do.
Economic bubbles, bursts and bailouts can result from any of these models taking hold. In each case, the executives, lenders and consumers are "out of their right minds". They cannot come to realizations about other choices, long term consequences or better solutions for everyone involved. A melt down is their only option.

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