In the New York Times an article by David Carr offers an explanation of why the recession has occurred so brutally swiftly. Because we have learned about it far more quickly than ever before in history.
"Every modern recession includes a media séance about how horrible things are and how much worse they will be," David Carr writes in today's New York Times, "but there have never been so many ways for the fear to leak in. The same digital dynamics that drove the irrational exuberance—and marketed the loans to help it happen—are now driving the downside in unprecedented ways." In any given morning, Carr braves televisions in taxi cabs and elevators, news tickers in Times Square, email alerts, online advertisements, and instant messages that all feed the fear. "This recession got deeper faster because we knew more bad stuff quickly,…"
“There are studies on bank runs, and it shows that people who know others who have taken their money out of the bank are much more likely to do it as well,” he said. “We always overshoot the upside and, because of the same contagious effects, we overshoot the downside. Everything is fine, and then all of the sudden we are looking for water and supplies to ride out the coming storm."
The phenomenon also seems to correspond to the idea of Social Proof', also known as informational social influence, is a psychological phenomenon that occurs in ambiguous social situations when people are unable to determine the appropriate mode of behavior. Making the assumption that surrounding people possess more knowledge about the situation, they will deem the behavior of others as appropriate or better informed. (Wikipedia)
It all highlights the fact that wealth is often imagined, rather than real - or a perception. Your neighbour's new car or plasma TV seems to be evidence of their prosperity when, in fact it simply represented their easy access to credit. Having made the decision to purchase the goods the neighbour is far more like to behave in a way that promotes the idea that it was the correct thing to do (post-purchase dissonance). The swagger will influence people in his or her circle - who are motivated to keep up with the Joneses, and who find easy access to credit in-store too. So the cycle continues.
Me, I'm happy with my old CRT TV. The news doesn't look as bad on it as it does on your home movieplex.
Heads up from The Daily Beast