(Demonstrators camp outside St Paul’s Cathedral in London October 20, 2011/Toby Melville)
Are you a money maniac? While finishing up Michael Lewisâs âBoomerang,â his latest book on the financial meltdown, I was intrigued by a few of his observations on a cultural and psychological malady. Since some of my academic training is in psychology, Iâll take a stab at what I think is going on. We spend (and eat) too much because the culture encourages it at every turn, but we have the ability to resist temptation. Weâre hardwired to do the wrong thing, yet can still make rational decisions. Thereâs also a part of the brain that Lewis didnât really explore in much depth. Iâm not sure what itâs called, but it involves conflating risk with the likelihood of financial success. Behavioral economists have many descriptions of these miscues. One might call it intentional and persistent denial. Invest in the stock market through your 401(k) and forget about the risk to your long-term wealth! Use those multiple credit-card offers you get in the mail every week to borrow to the hilt! Get an extra 10-percent off at the department store if you sign up with their onerous credit plan! We just canât escape what I call âthe buffet effect.â All of these financial goodies are laid out all the time for one seemingly low price. So we gorge on this table of plenty, only to later find out how empty financial calories can hurt us. Many of us just canât help ourselves. Thatâs our culture. Weâre not only in the land of plenty, weâre in the never-never land of too much. When I eventually waded through Lewisâs perversely scatological insights on Germans and wondered if Icelandic men were really that overconfident that they could morph from fishermen to currency traders in a matter of weeks, I found a real nugget in the research of Peter Whybow a psychiatrist and neuroscientist. Dr. Whybow, author of the more useful American Mania: Why More Is Not Enough, says itâs our âlizard brainâ that is driving our overconsumption. After all, when we were living in caves (and much earlier), we hoarded food and firewood and worried about saber-tooth tigers. Now we substitute debt-driven obsessions for those primal concerns. Maybe we squirrel away credit cards because of a misperception of scarcity. Did those Wall Street bankers and Main Street borrowers put their lizard brains in overdrive during the bubble years and ignore the more-evolved parts of the neocortex that engaged self-regulation? While that canât be measured in any meaningful way, itâs as good a theory as any. Maybe the buffet effect was such a cultural imperative that it got the better of those who couldnt say no. âWhat is it about the way our brains are wired that makes the risk and competition of the market place so compelling?â Dr. Whybow asks on his website. That leaves us with a dilemma as a species. How do we squelch the lizard brain and move on?Â I thought I might find some insights by taking the mania quiz Whybow offers online. When my results came up, the text was a question: âdo you live in a monastery?â Not much help there. Iâm certainly no saint. Does that mean that Iâm more ascetic than most Americans because I tend to favor saving over spending? If so, then I hope thatâs a partial answer. For years, my mantra has been to save at least 10 percent of my pre-tax income; more if I can. I place savings above spending when I pay my monthly bills. If I know I canât cover an item that I put on my credit-card bill that month, I donât buy it. This is pretty standard stuff for living within oneâs means. Yet what Iâm describing is a forced behavior and not any personality trait. I donât think weâre born savers or spenders. We can largely choose what we want to do and be. Of course, I think thereâs lots of research that shows youâll likely have money problems if you have a substance abuse issue, relationship problems or mood disorders. If thatâs the case, see a doctor or therapist. We need to embrace a different, more realistic and less emotional narrative if weâre to ensure our financial survival. Home investments are not risk-free. Stocks do not get less risky over time. Bonds can go down in value. Inflation never really goes away. We canât out-trade machines that use high-speed algorithms moving at the speed of light. We can never know more than a market of professionals with a world of information at their fingertips. Greed is always good â for Wall Street. If none of these realities boomerang to change our mass financial behavior, then perhaps one thing will: Only self-discipline will work in prioritizing saving over the mania of unbridled debt. We have to start with ourselves. Â
LVW Advisors, which has about $4.9 billion in assets under management, has become the latest independent firm to join Dynasty’s adviser network.Dynasty President and Chief Executive Shirl Penney told Reuters that the firm plans to have $10 billion in assets within the network and 10 adviser teams on board by year-end.”I can say confidently that we’re on pace for both,” he said. “Looking at the pipeline, we’re going to have a series of large advisers join.”Dynasty currently has three adviser groups with more than $1 billion in assets. Most of the company’s adviser teams are headed by veteran advisers who spent years at the brokerage arms of large banks. Dynasty is backed by a number of former wirehouse executives, including the founders who were former Citigroup executives.Rochester, New York-based LVW was started last week by 25-year industry veteran Lori Van Dusen, who spent the bulk of her career working at Citi. Van Dusen had worked with Penney at Citi Smith Barney.
Growth forecasts for Germany were slashed on Thursday amid fears that Europe’s largest economy will grind to a near standstill as a deepening banking crisis threatens to plunge the continent into recession.UK DATA EXPOSES SHIFT IN THE PAY GAPWages for public sector staff in the UK have risen by 13 percent more than their private sector peers in the past ten years, but only for those on lower pay grades, according to data released on Friday.BP PLANS UK OIL DEVELOPMENTBP has announced plans for a 4.5 billion pound development of the Clair field, a seven billion barrel superfield off the Shetland Islands.The TelegraphJOE LEWIS BID FOR PUB GROUP SAILS AWAYBillionaire Joe Lewis has withdrawn his 941 million pound takeover attempt for pubs group Mitchells & Butlers , leaving shares down 6.9 percent at 235.3 percentUK REVENUE PURSUES 6,000 SWISS HSBC ACCOUNTSThe British government’s taxation arm, HM Revenue & Customs (HMRC), is withdrawing its amnesty on 6,000 wealthy HSBC customers and demanded they declare taxes due on Swiss accounts or face criminal charges.WSJ MAY UNDO NEWS CORPRupert Murdoch’s News Corporation is facing severe new legal pressure as The Wall Street Journal becomes a lightning rod for widespread anger in the U.S. at the way the company has behaved.The GuardianCARREFOUR SOUNDS ALARM OVER ECONOMYDeepening economic gloom has forced Europe’s biggest retailer, Carrefour , to issue its fifth profit warning this year.The IndependentUK BANKS DOWNGRADED AS STRESS TEST FEARS GROWSigns that the Government has become less likely to support lenders led to another credit rating downgrade for Lloyds and Royal Bank of Scotland on Thursday against the backdrop of concerns that new European stress tests could leave the sector in need of billions of pounds of extra capital.