Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

The Six Psychological Stages of Denial

As the dollar and government debt bubbles pop in Phase II (the Aftershock), people will naturally be very upset. We believe there will be six distinct psychological stages in which individuals, businesses, and governments will first ignore, then react to, and ultimately solve the economic problems. Each of these psychological stages performs the function of keeping people feeling as comfortable as possible while avoiding making any more changes than are absolutely unavoidable at that point in time. Change is threatening, inaction equals safety, and comfort comes from avoiding any changes that might threaten the benefits of the status quo. But the consequences of inaction also create pain, so eventually some actions are taken.

Over time, as the U.S. and world economies worsen, complete denial and inaction will not be entirely possible. Still, people will strive to ignore what is happening and do the least they can because the many benefits of the old multibubble economy are hard to give up. Our understanding of the underlying psychology of coping with and resisting change is one more thing that sets us apart from all the other bearish analysts. We know that at each stage of the falling economy, there will be a deep longing to return to the past and get back to the good times. Actually, the really good times are still ahead, but first we will pass through six psychological stages of coping with the current Bubblequake and coming Aftershock. ...