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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Knighty Tin who wrote (132697)11/3/2001 7:50:19 PM
From: ild  Read Replies (1) of 436258
 
IMO this is right on the money about resiliency in consumer spending:

Carl: I had dinner last night with a psychologist who talked about how the
stock market was acting like a person with post traumatic stress disorder.
In PTSD, people often over-spend immediately following the tragedy. She had a
lot of examples. Women who are assaulted often go over spend on clothes,
people who just survived an automobile accident will often buy a very
expensive car. The idea is that you just suffered a loss and are entitled to
"buy" your way out of it... That you can make up for the psychological loss
with material things. Generally speaking, this just compounds the problem.

She believes the market is doubly traumatized, first by the NASDAQ's crash and
then by the events of September 11th. If the market follows the human model of
PTSD, it will be experiencing a "grieving period" where it won't want to buy
anything and the market will again go down. The beginning of the grieving
period may begin at any time and could be triggered by another assault.

EDITOR: This is a very interesting comment as I look at my personal actions
following 9/11. At first I was shell-shocked, but then I went on a spending
spree, which I would characterize as being motivated by a fatalistic sense
that there may be no tomorrow. This kind of mechanism may explain the unusual
firmness of consumer spending in the last month.

Certainly the stock market is a massive psyche composed of the individual
psyches of all market participants, and there could be a fatalistic
recklessness behind the rally from the September lows. I'm a lot more
comfortable with that explanation than I am with the assertion that the
economy is going to turn on a dime and begin another 10-year upswing.

decisionpoint.com
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