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Saturday, October 16, 2010

Human Nature is to React Rather than Prevent

Human nature is such that the default behavior is to react to issues, and not spend energy to prevent a problem from occurring.

There are many good reasons to operate in such a way. For example, what you think is destined to be a huge problem, I may see as a non issue. Such debates on decisions fall into the political arena to decide. There is no clear cut answer that can be scientifically proven beyond a shadow of a doubt to be justification for acting before a problem occurs.

Example, your health
As a quick example, we all know that being over-weight increases health problems. Yet are you as fit as possible? Do you have a washboard stomach? Why not? Study after study has shown exercising and keeping fit will lead to a healthier, longer life.

The answer is simple, although statistically you are at risk, there are still some people, no matter how few, where overweight doesn't seem to adversely affect them until well over 70 or beyond. Therefore, all of us justify our lack of being at an ideal physically may not be a problem.

Now, how many people after having a near death or mild stroke experience lose weight and exercise? I don't know the statistics, but I'll but anyone 100 bucks the number of people who get serious about being healthy is higher AFTER having a close call with death or impairment, than those told by their doctor proactively improve their physical health.

What does this have to do with financial investing
I believe part of the financial crisis that was originated in 2000 continuing to today is due to Human Nature to react. Each legal entity in the financial area contributes to the situation with What they know, rather than the best answer.

Ranting and yelling by the FBI, by the US comptroller , or by the people (blogs) can have an influence, but not change the course. The participants will continue to respond with what they know, until it is proven, beyond any shadow of a doubt, and society demands and enforces change.

And therefore the financial and political trajectory MUST come to a huge failure, due to human nature, to have meaningful change. The manifestation of that failure, is debatable.

What about the exception to the rule?
There have been leaders who truly lead, rather than reacted. However, people of such character and independence are scarce in today's US government. Those that are in the government that have an independent, righteous attitude are often cast as fringe, or dismiss-able. They are labeled extreme, or unstable.

So while it is POSSIBLE that the world financial issues will not result in a crisis moment, the US government has not shown the capability to do so. I have well documented each step of the US government in my Financial Ground Zero series.

This post will be used in a subsequent post to make a case for a US dollar failure.

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