The times are tougher than they have been in a while, but an interesting article in the New York Times explains the irrationality of the fears for most and the damage this causes.

Instead of taking a look at ones personal situation, we are driven to distraction by the fears of our neighbors, or more likely the guy a couple of blocks over, in our decision making. The mass mentality of tightening up, or the hive effect, is making the downturn much worse than it probably should be.

Like the builders who all kept building when things were going well because their competitor was, we are now laying off and cutting back when there is no real need. Go read the article, it will not change anything, but it does explain the mentality of American’s as a whole right now.

“When everyone is talking about recession, we all feel like something has to change, even if nothing has changed for us,” said Dan Ariely, author of “Predictably Irrational,” a book that explains why people do things that defy explanation. “The media messages that are repeating doom and gloom affect every one, not just people who really have trouble and should make changes, but people who are fine. That has a devastating effect on the economy.”

With unemployment, auto sales, home foreclosures and consumer confidence all benchmarking historic levels of distress, news outlets are hardly making it up. But the machinery of the economy began to freeze in place far more quickly than it has in the past, in part because so much scary data is circulating so much faster than it used to. This recession got deeper faster because we knew more bad stuff quickly. via NYTimes.com.

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