NOISE Pollution. There's so much of it. And...I'm not just talking about blaring horns, construction traffic or loud music booming with subterranean intensity from stereo sets.
While these annoyances are disconcerting, we all have learned to live with them. The Noise that we'll be exploring in this short series is more insidious. It's the kind of Noise which has the ability to impact your well being in a fashion that physical Noise cannot.
There are two types of NOISE that I've been reflecting on for the past couple of days. They are Financial Noise and Emotional Noise.
I recently bought the book, 'When Markets Collide.' The bestselling author, Mohamed El-Erian is one of the most gifted and successful risk managers in the world. In a recent interview with TV journalist Charlie Rose, he talked about the confusion that occurs when financial data is interpreted in completely opposite ways by financial analyst studying the same numbers.
One example of this type of Noise is the manner in which investors rushed headlong into the sub-prime markets while ignoring the signs of weakness in the larger economy AND the lack standards used to approve loans. A signal which should have raised alarms by risk analyst.
What Happens When We React Rather than Respond to Noise?
When we miss the signals which point to a cacophony of confusion, there is a tendency to continue on a course that eventually leads to disaster. Witness the fall-out of the sub-prime lending crisis. But, I think that there is also another danger. This is the failure to discern opportunities because of perceived chaos.
Noise grates. Noise jars the senses. Noise distorts our perception of reality.
Ultimately, that's one of the biggest reasons that Noise is so dangerous. It keeps us off a strong footing. The housing market has had it's share of Noise in recent years. Over the last decade, we all watched loans provided to buyers which didn't make ANY sense.
Dubious Standards included: No income verification, No verification of assets, No Money Down, Limited Credit analysis for loans which were being given in a hyper-inflationary home market. The most lax standards in history were being pitted against some of the highest prices increments. NOISE.
Meanwhile, homeowners who were increasingly strapped for cash were pulling money out of their last remaining major asset with home equity home loans at incredible rates. Many were financing a lifestyle which had just been sharply curtailed due to a job loss. So, without jobs or significant pay increases, we spent ourselves silly. And worried about how we'd survive while indulging in a spending frenzy. NOISE.
So, are there ways to avoid being drowned by Noise? Can we deal effectively with Noise Pollution? Well, we'll explore that in Part 2 of this blog post.
Infernal Noise Brigade photo is courtesy of mahalie's photostream on flickr.com
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