How do we begin to make sense of the current global economic situation? Half of Europe is teetering on the edge of economic collapse and here in the US we are struggling to claw our way out of recession. How is it when everything seemed so great only a few years ago does it all of a sudden now look so bad?
It’s popular to blame the Wall Street Bankers for the financial crisis here in 2008 and the Greek, Spanish, Irish, etc leaders for racking up ridiculous amounts of debt for the current European crisis. But are they just convenient scape goats when the problem really lies within all of us?
Denial is a defence mechanism employed by humans when they have an inability to cope with unpleasant news. Psychologically, it is an important mechanism allowing us to cope in situations where having to deal with the truth of a situation is too unbearable. Although it serves us well in desperate situations, it is self destructive in the long term because if you are in denial of a problem you can’t manage or resolve it. Inevitably it will only get worse. So it is a psychological anaesthesia best used sparingly.
But what happens when we collectively as humans have become so superficial, selfish and intolerant of bad news that we prefer to live in denial of economic problems? Rather than create wealth through hard work we short cut. We expect investment returns in denial of the risk. We elect governments that will only tell us things are ok when they are not. What happens when we want to contribute little but expect everything in return?
Well the problems manifest until they reach the stage they did in 2008 and are now reaching in Europe where we see countries that have lived beyond their means for too long and democratically elected governments that have feared to confront the problem. They are now burdened with massive debt with no foreseeable way of ever building out of it.
And what of austerity measures? We are seeing mass anti-austerity protests and governments voted out of power for trying to enforce austerity. Are these countries still in denial – thinking things don’t need to change despite their train wreck economy? (In their defence I should say, perhaps they understand the mess they are in but just want everyone to wear the consequences equally?)
Anyway, who is to blame? Is it the Greeks, Spanish and Irish for living beyond their means? Is it the Germans for lending them too much money so they could sell their exports? And surely the Euro was a dumb idea in hindsight? Well the blame game is but a distraction. Until we can honestly confront the denial that allowed these once manageable economic problems to manifest I fear not only will Europe fail to recover but the rest of the world may suffer a similar fate.