In 2000, Prakash Loungani, an economist with the International Monetary Fund, published the results of a survey which looked at the ability of economists to accurately forecast economic downturns in 63 industrialized and developing countries. "The record of failure to predict recessions is virtually unblemished," Loungani concluded. The current global financial crisis - or GFC as it has been tagged - fits this pattern. A mere handful of maverick economists got it right, as did a psychic or two - among the thousands of other psychics... see story here. Most economist don't even acknowledge that the recession/ depression bottom, may take different profiles which I've coined based on the alphabet letter shape that it could take. Will the bottom be a V-shaped bottom? U-shaped bottom? W-shaped bottom? v-W-shaped bottom? J-shaped bottom? L-shaped bottom? extended L-shaped bottom? (I envision at least 7 possible scenarios) Update:
See cartoon from March 2009 on right
Why it's so hard to say "yes" when everyone says "no"
Every entrepreneur knows how tough it can be to contradict the conventional wisdom, to zig when everyone else is zagging. A study in the journal Neuron shows why: When an individual holds an opinion that goes against the others in a group, the body sends an "error signal" by firing up a zone known as the "oops area" of the brain while slowing down the so-called "reward area." "Our brains are exquisitely tuned to what other people think about us, aligning our judgments to fit in with the group," a psychiatry professor at Emory University said.
"We show that a deviation from the group opinion is regarded by the brain as a punishment," said Vasily Klucharev, postdoctoral fellow at the F.C. Donders Centre for Cognitive Neuroimaging at Radboud University Nijmegen in the Netherlands and lead author of the study.
This study confirms what I've noticed with many budding entrepreneurs-they fall into what I call the "Conformity Trap". It shows that most people are hardwired "not to be Opportunity seekers or to look for outliers in patterns" It demonstrates why so many people were in denial in Spring and Summer of 2008 that a recession was imminent despite the overwhelming evidence and will likely miss the recession bottom and resulting opportunities because they will be paralyzed by anxiety, fear and inaction --natural self protecting mechanisms, that we have to overcome. --Walter Derzko
The two leading theories of conformity are that people look to the group because they're unsure of what to do, and that people go along with the norm because they are afraid of being different, said Dr. Gregory Berns, professor of psychiatry and behavioral sciences at Emory University School of Medicine in Atlanta, Georgia. Berns' research, which he describes in the book "Iconoclast: A Neuroscientist Reveals How to Think Differently," found that brain mechanisms associated with fear and anxiety do play a part in situations where a person feels his or her opinion goes against the grain."
CNN (1/15)
(Hat tip to Gray Hammond)
© 2005-2009 Walter Derzko -"Changing the world, one idea at a time"© Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios. Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy " The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !! To arrange for an in house presentation or briefing on smart technology see here To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together P. S. if this is your first visit to my blog, please go to our Welcome page
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