PeterGlenshaw.com

Irrational

I began this post two weeks ago on October 14, 2008.  The demands of family, work, local politics, and a 1,001 things have caused me not to finish the post since then. 

But the title of this post remains as true as it was two weeks ago.  Here is what I wrote on October 14th:

Alan Greenspan made famous the phrase "irrational exuberance" several years ago when he described the dot-com bubble and its messy aftermath.

Fast forward to 2008, and we find ourselves in times when a simple "irrational" best describes the world in which we live.

Here are three signs that logic, like Elvis, has left the building.

1.  The Dow Jones Index increasing by more than 900 points on Monday, October 13th. 

Huh? 

I'm sure we are all relieved that it's NOT the end of the world as we know it, but surely we can't be that happy.  The fundamentals -- both good and bad -- remain. 

There is an expanding global middle class and red-hot economies abroad.  Let's add those to the "plus" column. 

On the other hand, a long and protracted global recession is surely not far away.  Trade imbalances, currency problems, shrinking consumer markets, weak regulations, and (perhaps most importantly) an imbalance in the flows of capital between mortgages, nationalized asset managers, and high net-worth individual and institutional managers make for a messy situation that will take years to untangle.

(I wrote the above paragraph on Sunday night, Oct 12th.  Stock markets have responded accordingly).

2. Obama is way ahead in both national polls and in the polls of battleground states.

Again, I remember sitting on a similar lead of 6-10 points in New Hampshire the night of the primary in January 2008. 

Who won?  Not Senator Obama.

Assume nothing, not just as a tactical strategy but as an imperative.  Despite more than 20 months on the campaign trail, which have included countless interviews and more than thousands of in-person appearances, Senator Obama remains far too unknown and, frankly, scary to too many people.  This past weekend I canvassed in northern New Hampshire and while I was cheered by the overwhelming number of Republican-leaning or Independent-minded voters who were supporting Obama -- in fact, it wasn't even close in my group...Obama had everyone's support -- I heard from other canvassers that McCain is the preferred choice of many.

Time and other duties intervened before I could point #3 to my list, but the basic facts of my post from two weeks remain as true today as they did.

1) Today we saw the Dow increase by nearly 900 points, just as it did two weeks ago.  Despite signs that consumer confidence was at an all-time low, investors over-reacted to the possible news of an interest rate cut to drive stocks higher.  Crazy?  You bet.

2) I got three different phone calls today from good, smart people who said the same, dumb thing: "Looks good for Obama, right?"

Wrong.  He's way ahead in terms of voters in battleground states who are voting early, but otherwise it's a tie, according to Zogby.  In fact, as Zogby reports today, and as we all saw in New Hampshire some 11 months ago, there are plenty of voters whose support for either candidates remains incredibly soft.  I heard today from Zogby that some 18% of New Hampshire voters on Primary Day 2008 made-up their minds that morning!  I think the same is true today.   This race is more fluid and tight than most people realize.

3) The crisis has gone global.  We may not see the effect until after November 4th, but when I wrote above about "red-hot economies abroad," I was wrong.  Think Poland and Iceland.  Even China and India project slower growth.  There has been a lot of football talk about how this crisis goes beyond any playbook that economists and central bankers currently know.  The global dimension makes it a 3-D crisis, which is both good and bad.  Good -- because actors like Prime Minister Gordon Brown of England can take the lead in solving this problem.  Bad -- because what might work for the US is not what it takes to solve the problems of Iceland, and worse, those problems might be big enough to drag other stakeholders into the mud.

These days, in the waning days of Fall, when most of the beautiful leaves have fallen to the ground, I found myself listening to "Darkness on the Edge of Town" by  Bruce Springsteen. 

There's a lot of concern in that album, but, in the middle of the ten songs on "Darkness," is a simple lyric:

"Mister, I ain't a boy, no, I am a man, and I believe in the promised land."

Last weekend I went from house to house, and in some cases from room to room, in some of the poorest neighborhoods of New Hampshire.  Far too many people I met should have been Obama supporters.  Their teeth were yellow, their houses falling down, their clothing threadbare in the face of what promises to be a difficult winter.  But they were for the man who promises more tax cuts for the wealthy, the most modest of health care reforms, and a continuation of the war in Iraq which is served by the sons and daughters of the people I met.

I could have been discouraged, and maybe after Election Day, if the figures add-up to a McCain victory, I will be extremely discouraged.  But even then, I won't give up.  I believe these good people can be on our side.  It may seem irrational, but I believe that the message and policies offered by Barack Obama and the Democratic Party will serve the interests of most people. 

I think we are extremely close to winning that argument.  The next seven days will make it clear if we have been successful.

Panic & Gender

A few nights ago, after a busy, busy day at work -- the kind of day that did not end until 8:30pm -- I came home and, in the midst of my own wind-down from the day, realized that my youngest son needed some additional minding.

Convinced that there was a mouse in his bedroom, my son stood awake and fitful at 10:30pm and it became my job to restore order.  I hadn't eaten dinner yet.  Given the hour, I was (frankly) kinda fried.  And that's when, as a parent, you have to dig deep. 

So we cuddled in bed.  We sang songs and chatted.  We held hands.  And slowly but slowly, my son's breathing slowed, his heart rate fell, and sleep came to him like a soft blanket. 

In times like these, when your own agenda can so easily dominate the situation, the ordinary and simple get restored to their rightful place as most important.  It's not about that report you have to file.  Or that email you need to write.  It's about a young boy in the middle of the night who is scared and needs your hand.

And, as he and I lay there, as his breathing waxed and waned alongside the moon with the clouds, I wondered about the stock market and who was minding the fund managers that same evening.  For all of our hubris and confidence and capability, there come times when even the best and the brightest need something more than analytics and metrics to guide them.  In both the darkest and brightest moments, isn't it appropriate to ask, where is the cuddle?  When is the hand of a top 401k fund manager held?

I ask these questions not simply because that moment with my son occurred.

Rather, in following all too closely the stock market collapse of the past week/month/year, it's become apparent to me that gender might be playing a far larger role in our response than previously imagined.

Over the past ten days, as the S&P and Dow have plunged mightily, my observation is that men overreact and women remain calm.

Every guy I've seen, almost to a fault, have ignored the Red Sox and Patriots.  The only "game" we seem to follow these days is the stock market.  Whether it's a soccer sideline, a neighborhood bar, or chance meeting in a public space, the guys I know are obsessed (frankly) with every slight tick of the market.  We don't compare the scores from sports anymore.  It's how is General Electric doing, or Intel, the Dow, or the S&P. 

And, to make matters worse, the more we follow the stock market, the worse things seem to unfold.  There's an obsessiveness to men and the market.  Thru our Blackberrys, iPhones, and laptops, we relentless follow the market into a predictive depressive state. 

Women, on the other hand, seem cool, calm, and relaxed in this financial storm.  Even women with significant financial and I-banking experience react far differently than men with an amateur but well-intentioned understanding of the market.  As one woman put it to me, "Relax.  You're not helping anything with your worry.  Step back, see what happens, and then go from there."

These aren't ignorant people speaking.  On the contrary.  These are well-informed women whose reaction to the financial meltdown isn't panic, but consideration.  As if to say, "OK, you're in a crisis, but this won't last, and then what do we do...."

As opposed to most men, whose reaction (and I count myself among them) is to akin to saying "fire" in a crowded movie theater.

The interesting thing to note, of course, is that most Wall Street traders, brokers, and executives are.....drum roll, please.....: men.

Hmmmm.

Would the markets collapse so quickly and so precipitiously if there were more women on Wall Street?

I don't know, but I will share this anecdote.  The other night, my only daughter, an 8th grader, gathered her friends for their monthly "Mother-Daughter" book group.  In addition to sharing dinner and conversation about the book, the 8th graders got into costumes that reflected the characters in the book.  When I got home around 9:30pm with my sons, I found a group of women and early teenage girls in happy, bubbly, cooperative atmosphere.

This was a far contrast to the 6th grade all-boys sleepover held a week earlier at my house.  The former was "Little House on the Praire."  The 6th grade boys sleepover was "Lord of the Flies."  Whichever 6th grade boy was the biggest, won.  It was a state of affairs marked by constant fighting, boasting, and one-ups-manship.

Sure, I know it's the ages and maturity of the kids involved, but a certain immutable truth emerged from those experiences which has some bearing, in a modest way, on the markets we encounter today.  My sense is that women are the far more sensible, sane sex in many ways.  Guys like me all too often go for the jugular, whether we are 12 years old or 42 years old.  For us, it's an all-or-nothing proposition.  For women, let's just concede that they see an equation which is more balanced and harmonious. 

I would not want to suggest that DNA or gender equals destiny, but I do believe that future models of governance -- political or corporate -- ought to consider these factors.

Fear Itself

At a meeting of the Lyme Democrats earlier this week, on a day when the Dow had dropped some 500 points again, I reminded everyone that seventy-five years ago, a great American had risen to speak to the nation about illusory power of Fear.

Franklin Roosevelt's first inaugural address bears re-reading in 2008, not only for its eloquence and wisdom, but as a voice from the ages speaking to our present and immediate future.

After reminding his audience that "the only thing we have to fear is fear itself," Roosevelt outlines the "common difficulties" facing the nation in 1933.

They concern, thank God, only material things. Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; and the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

And yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered, because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.

Primarily, this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True, they have tried. But their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

Yes, the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit.

The entire address can be read here, but even this brief excerpt suggests an uncanny resemblance to the financial challenges of 2008.  Greed and unsupportable credit? Check.  Belief that the pursuit of profit without social values or vision leads to ruin for the people?  Check.  Faith in the American people who have triumphed in the face of harder challenges in our past?  Check.

And yet, as I read these remarks, I am also reminded that Fear has a power of its own, a power that does not change with time.  We may seem modern and more sophisticated than the world of 1933, and believe our political and financial institutions have been updated to withstand any challenge, but Fear has not changed. 

In political terms, Fear plays on what Arianna Huffington of The Huffington Post has called the "reptilian or lizard brain."

Deep in the brain lies the amygdala, an almond-sized region that generates fear. When this fear state is activated, the amygdala springs into action. Before you are even consciously aware that you are afraid, your lizard brain responds by clicking into survival mode. No time to assess the situation, no time to look at the facts, just: fight, flight or freeze.

When we are in this state, we are biologically programmed to pay less attention to left-brain signals -- indeed, our logical mind actually shuts itself down. Fear paralyzes our reasoning and literally makes it impossible to think straight. It's the neuroscience, stupid!

It's no wonder, then, that McCain and Palin -- in times likes these -- continue to hit the Fear button at their campaign rallies and in their television advertising.  Whether it's using Obama's fullname ("...my opponent, Barack Hussein Obama...") or making false claims about befriending "domestic terrorists," the McCain-Palin team have responded to the financial crisis by injecting more fear into the national conversation. 

We know the tactic worked, at least for a while, in the early parts of the 2008 Democratic primary when Hillary Clinton falsely claimed Obama would not support a woman's right to choose.  On the day before the New Hampshire Primary, a mailer went to every woman in the Granite State with that fearful claim, and Obama narrowly lost an election where polls indicated he was ahead by a substantial margin.

Fast forward to November 4, 2008.  Althought Obama appears to be ahead in enough states to win the election, I believe this election will be close, and it will be close because Fear stands resurgent like Lord Voldemort.  This generation has not known such Fear and no matter how much has changed since 1933 in terms of our tolerance regarding race, Fear remains a powerful, almost unrelenting presence.

On that day, millions of Americans -- and if the number of people watching the Presidential debates are any indication, we could see a staggering large turnout that day -- will enter a small, dark booth to cast a vote in private.  This is where Fear works best.  As The New Yorker writer Steve Coll writes this week in his blog that "People don’t generally panic in the sunshine. They panic in the dark." 

So, what will happen?  Will Fear triumph in the voter booth in November? 

The answer resides largely with each of us.  If we act as mere individuals -- unconnected from our neighbor, concerned about ourselves only -- Fear stands a good chance of winning in less than four weeks. 

On the other hand, if we act as a community, being mindful of what Roosevelt called "our interdependence on one another," then I believe the dark recesses of the voting booth will fade.  In order to vanquish Fear in the 2008 election, people everywhere must come together to vote their conscience.  The choice is ours to make.  We should not be afraid.

Phalin', Phlailin' Sarah Palin

On Thursday night, I hurried home from a fundraiser for Barack Obama to watch the Vice Presidential debate with my daughter, who had wisely been asked to watch it and an upcoming Presidential debate as part of her 8th grade social studies class. 

Along with Red Sox, the 2008 Presidential race has been a frequent topic of discussion between and my daughter for the past two years, not only for its currency but also a prism into a larger world she is discovering as a teenager.  When Manny was traded to Los Angeles, the larger question arose, why do teams trade players anyway, and what does this mean about loyalty?  As I watched the Sarah Palin performance on Thursday, where she did an admirable job of impersonating a Vice Presidential candidate, the larger question actually arose to me:  what kind of virtues does Sarah Palin model for my daughter given the way she answered responded to questions in the debate?

Leaving aside political ideology -- there's very little I think my daughter ought to embrace in Palin's rigid political ideology, but that's her choice to make, not mine -- it seemed that Sarah Palin demonstrated the unattractiveness found in adults who have not matured. 

Instead of displaying consideration for a different point of view, Palin rigidly showed  certainty in her answers and views of the world.  She winked like a used car salesman instead of relying on the strength of her words to support her argument.  Instead of using evidence, Palin relied on repititive bumper stickers phrases like "mavericks" and "greed and corruption on Wall Street."  She ignored questions, talked over her opponent, and as is increasingly the case with the McCain campaign, and used small mis-representative things to make her case (e.g., the Obama tax increases).  And she dropped world-shaping, Constitution re-writing ideas -- like enhanced powers for the Vice President, or placing the American embassy in Jerusaleum -- into the debate as if they mere trifles.

Leave aside what Palin suggests as a woman.  As a person, Palin stands for the dumb and dumber adult.  She does not know the world, and does not care if she knows it.  Her sensibility stretches about as far as Paris Hilton's, where impressions triumph substance (the best example being Palin's correction of Biden on the phrase "drill, baby, drill").

In his dystopian film, "Idiocracy," Mike Judge (creator of the MTV's "Beavis and Butthead") suggests an American future filled with creatures like Palin who are certain and stupid.  That film placed "Idiocracy" to be 500 years from today.  The reality is, in less than a month, Palin could be a 72-year old's heartbeat away from leading the United States.  It's a horrifying thought. 

She is unqualified to be the President, especially in a time of war and economic collapse.  As an adult, she stands for everything our kids should not become as they mature. 

And yet there she is, winking and insisting her way to the top. 

I don't know if my daughter noticed all of this while watching the debate (she did catch that every time Palin used the word "family," the focus group watchers on CNN recorded a more favorable impression of her).  But I did, and afterwards while throwing the ball to my dog on one of the first cold evenings of Fall, when there wasn't much of a moon, when it seemed like the headlines could not get worse, everything around me seemed a bit darker and more forboding.